Please also note that this event is being recorded today. I would now like to turn the conference over to Kirin Smith, Investor Relations. Please go ahead.
Thank you, operator, and thank you everyone for joining us today. AMS's first 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 our Form 10-Q for the second quarter ended March 31st, 2026.
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. With that, I'd now like to turn the call over to Ray Stachowiak, Executive Chairman. Ray, please go ahead.
Thank you, Kirin, and thank you all for joining us today. First, I'll start with an update on our recent management changes, and then we'll provide some key highlights from the quarter and give further detail on our enthusiasm and confidence in our growth prospects. In late April, we announced a leadership transition with Gary Delanois stepping down as our Chief Executive Officer for personal reasons and the board appointing Craig Tagawa as our interim CEO. We thank Gary for his valuable contributions and wish him the best of luck in his future endeavors. Craig brings more than 35 years of experience with the company, including leadership roles as our President, Chief Operating Officer, and Chief Financial Officer. His deep operational and financial expertise, along with his long history with the organization, positions him well to lead the company through its next phase.
We are confident in the team's ability to continue driving execution, increasing treatment volumes, and supporting revenue growth. As we look at the first quarter and a continuation into the second quarter, we are encouraged by the continued progress across our network, particularly in terms of increasing treatment volumes and improved center-level performance. I'm pleased to report that we are continuing to see volumes trending positively into our second quarter as we remain extremely focused on strong execution. We saw meaningful growth in volumes at the Orlando PBRT facility, our Rhode Island centers, and our International Gamma Knife centers. They all contributed directly to our year-over-year revenue increase and reflects the ongoing ramp-up of these facilities. These trends are important as increasing utilization is a key driver of both revenue growth and margin expansion in our model.
Our partnerships remain central to our strategy, and we continue to work closely with our health system partners to strengthen clinical programs, support physician alignment, and expand patient access to advanced radiation therapy services. In Rhode Island, our collaboration with leading health systems continues to support improvements in staffing, referral patterns, and overall operational execution. As these centers continue to mature, we believe there's significant opportunity to further increase volumes and improve financial performance. Internationally, our Puebla center continues to demonstrate strong growth, and we remain focused on building on that momentum while also advancing our broader international strategy. Across our LINAC and proton therapy platforms, we are seeing steady demand trends, and we believe our investments in this technology and the clinical capabilities position us well to capture that demand over time.
Overall, we believe the progress we're seeing in volumes and revenue reflects the strength of our model and the foundation we built through our partnerships and investments over the past several years. Looking ahead, we see significant opportunity in international markets, including the development of our Guadalajara center, which we expect to begin operations late this year. In Rhode Island, we've also created a clear runway for expansion through our Certificate of Need approvals for a new radiation therapy 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. I remain bullish on the company's growth prospects and fully believe that the current valuation does not reflect the true value of our underlying business or the opportunities we have in store. I'll now hand the call over to Craig Tagawa, our President and Interim Chief Executive Officer..
Thank you, Ray. Good day, everyone. I am honored to step into the role of Interim Chief Executive Officer at this important time for the company. Having been with the organization for over three decades, I have seen firsthand the strength of our partnerships, the dedication of our team, and the evolution of our business. I'm committed to ensuring continuity in our strategy while maintaining a strong focus on execution, operational discipline, and delivering long-term value for our shareholders. We are encouraged by our performance in the first quarter of 2026, which reflects continued momentum in our Direct Patient Care Services segment and improving utilization across our treatment centers. Revenue increased approximately 15.9% year-over-year to $7.1 million, driven by strong contributions from our Rhode Island and Puebla radiation therapy centers, as well as growth in Proton Therapy volumes.
Importantly, this growth was supported by increased patient volumes across the network, which we view as a key indicator of strengthening demand and improved operational execution. I am also pleased to report that our adjusted EBITDA for the quarter increased 18.4% year-over-year. During the quarter, we continued to see progress in ramping up our centers, particularly in Rhode Island, where we have worked to stabilize physician staffing and enhance clinical operations. These efforts are translating into higher treatment volumes and more consistent performance across the platform. Our Puebla center also continued to perform well, benefiting from improved reimbursement dynamics and ongoing operational ramp-up, and we believe it remains an important contributor to both current performance and future growth. From a strategic standpoint, our focus remains on expanding and optimizing our organic growth across all of our sites.
This includes increasing utilization at existing centers, improving revenue cycle performance, and continuing to enhance our clinical capabilities and patient access. We are also seeing early benefits from the operational initiatives we implemented over the past year, including greater alignment of our cost structure with the scale of our business and improved coordination across our centers. While we still have work to do, we believe the progress we are seeing in volumes, revenue, and operating performance reflects that we are moving in the right direction and beginning to realize the benefits of our efforts. With that, I'll turn the call over to Scott.
Thank you, Craig, and good day, everyone. For the first quarter of 2026, total revenue increased 15.9% to $7.1 million, compared to $6.1 million in the prior year period. This growth was driven primarily by our direct patient care services segment, which generated approximately $4.1 million in revenue, up 30.2% from $3.1 million in the prior year. The increase reflects higher procedure volumes at our Rhode Island facilities and our radiation therapy center in Puebla, Mexico, as those sites continue to ramp up utilization and increase patient throughput. Leasing revenue was approximately $3 million, relatively consistent with the prior year period. While we saw higher procedure volumes in certain areas, these increases were largely offset by the impact of a Gamma Knife customer contract that expired in April 2025.
From a modality perspective, we saw solid growth in proton beam radiation therapy, with revenue increasing on higher volumes and total fractions rising over 20% year-over-year. Gamma Knife revenue also increased, driven by strength in our Direct Patient Services segment, particularly at international locations in Peru and Ecuador, where volumes benefited from equipment upgrades and improved operating conditions. Concerning the profitability, gross margin improved about 44% from the prior year to $1.3 million or 18.2%, compared to $0.9 million or 15.4% in the prior year period. This improvement was driven by higher overall revenue and better utilization across our treatment network, which more than offset the higher cost structure associated with our growing Direct Patient Services segment.
Total cost of revenue increased to $5.8 million from $5.2 million in the prior year period, primarily reflecting higher operating costs associated with our direct patient services model. This included increased staffing, facility-related expenses, and maintenance costs at our Rhode Island and Puebla locations. We also saw higher maintenance expenses as certain LINAC systems came out of warranty, and its PBRT in Orlando maintenance contract costs continued to increase. These increases were partially offset by lower depreciation and amortization expense, reflecting contract expirations and certain assets becoming fully depreciated.
Selling and administrative expenses increased modestly to $1.9 million, primarily due to higher audit, tax, and consulting fees, partially offset by lower legal expenses. Operating performance improved to a loss of $0.9 million compared to a loss of $1.3 million in the prior year period, reflecting the benefit of revenue growth and margin expansion, partially offset by the continued ramp-up in newer facilities which carry higher fixed costs in the near term. Net loss attributable to the company improved to $0.6 million, or $0.09 per diluted share, compared to $0.10 per diluted share in the prior year period. While we continue to report a net loss, this reflects ongoing investment in our Direct Patient Services segment, and we expect improved performances as utilization continues to scale.
Importantly, I am pleased to report that adjusted EBITDA increased 18.4% to $1.1 million compared to $949,000 in the same period last year. Turning to the balance sheet, we ended the quarter with approximately $5.2 million in cash equivalents, and restricted cash compared to $3.7 million at the year-end. This increase reflects improved operating performance and working capital timing. The current portion of our long-term debt was $16.8 million as of March 31, 2026, which decreased from $17.3 million at December 31, 2025. We continue to actively manage our capital structure as we support the growth of our operating platform. We also continue to have productive conversations with our lender regarding a potential extension.
Overall, we are encouraged by the improvement in operating performance and remain focused on driving revenue growth, expanding margins, and enhancing financial flexibility. With that, operator, we are ready to take questions.
We will now begin the question-and-answer session. Again, to ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw a question, please press star then two. At this time, we'll pause just momentarily to assemble our roster. Our first question here will come from M. Marin with Zacks, p lease go ahead.
Thank you. I'm just wondering, could you please remind us and also indicate whether you feel you're on schedule for the opening of the new facility that you had been talking about and which you referenced earlier in your scripted remarks, the new facility in Rhode Island?
Yes, thanks for your question. We're on schedule for those two centers. Keep in mind these are long-term projects. The radiation therapy center in Bristol, Rhode Island, would be our fourth center in the state. It's in an underserved eastern portion of the state. We're not expecting to open that facility for another 18 or 24 months. The proton beam facility in Johnston, Rhode Island, is even further out. It's about 24 to 30 months out.
Okay, thanks. I think I have one follow-up. You mentioned that first quarter results are not directly apples to apples because of the expiration of a contract last year. We are coming up on the anniversary of that. Should we expect that going forward there'll be more comparability between year-over-year results?
I think, even though that agreement expired, and so the volume treatment count was included in first quarter 2025 for comparative purposes, and we were able to maintain a steady treatment volume year-over-year despite that termination. I think the prospect would be an improvement year-over-year in that segment.
I'm gonna sneak in one last question. I know it's, you know.
Okay.
Then I'll get back in queue. Thank you. Would you say that underscores some of the benefits of your direct patient strategy to sort of take greater control over some of the revenue streams that you're looking at?
Yeah. We continue to see our Direct Patient Services segment continue to grow rather well. We believe that we've transitioned our company and its business model towards that segment. While still maintaining the revenue streams from our leasing segment, you know, in our quarter here, I think it was flat on the leasing segment, and our growth was in Direct Patient Services.
Thank you.
Again, if you have a question, you may press star and then one to join the queue. Our next question will come from Tony Keenan with Eastwood Partners, p lease go ahead.
Yes. Hi. It's nice to see some improvement in this quarter. Craig, it's great to have you in a position, you know, of even more importance. I know how long you've been with the company, so, that's great to see. I have a question and a follow-up. The first question is just for some clarification. In an April, Zacks report, it was written, quote, Benefits could be partially offset by a contract that the company expects to expire in Q2 2026. Can you comment a little on that? Is it, you just said, Ray, that it looks like, you know, treatment volumes are good and we've seen the impacts, starting to improve. Is that contract that is referred to that may expire something that's gonna be, you know, truly material or any color on that?
No, I don't think that'll have any material impact because the, we signed a 2-year extension for that agreement, so that revenue stream will continue from that site.
Okay, that's great. Then, my follow-up is sort of a comment and a question. The original going out of compliance with your bank was originally around the cash balance being under $5 million. I see that you're back over $5 million. I know that you had a couple other a couple other areas to get fixed there with fixed charges and I think an EBITDA ratio. Can you know, now that you are above it on cash, it's been quite a while. Can you just give us any sort of thoughts on, you know, how long you expect that process to continue with the bank? You've mentioned a few times that you have some, you know, positive feelings towards where it's going, but any color on that would be appreciated.
Yeah, that's a good question, Tony. Our discussions with our banking relationship with Fifth Third Bank, I'll say they're proceeding, they're, you know, going well. Beyond that, I can't comment on those discussions, but I am able to, I'll say, confirm, you know, our cash balance from 12/31, I think we had $3.7 million in cash, and as of 3/31, our cash balance has increased to over $5 million. Keep in mind that of that $5 million, some of it is in our international operations, and we have recently been successful in bringing some of that money repatriated back into the United States.
Okay.
Overall, you know, our cash balances have increased.
Great. Thank you.
This concludes our question and answer session. I'd like to turn the conference back over to Craig Tagawa for any closing remarks.
Thank you. In closing, we are pleased with the progress we have made in the first quarter, particularly the growth in our direct patient services segment and the improvement in operating performance. Our priorities remain consistent: increasing utilization across our centers, improving operational efficiency, and strengthening our financial position. We believe the foundation we have built positions us well for the continuing progress in 2026. Thank you all for joining us today, and we look forward to keeping you up to date on our progress. Please feel free to reach out to us for any additional questions you may have in the meantime. With that, I wish you a great rest of your day.
The conference has now concluded. Thank you for attending today's presentation, y ou may now disconnect your lines.