Quest Resource (QRHC) Financials

Quest Resource (NASDAQ: QRHC) is showing some improvement in operating performance in Q1 2026, but the company remains under pressure from heavy debt, thin liquidity, and ongoing net losses. The latest quarter shows revenue growth and near-breakeven operating income, yet interest expense continues to wipe out operating gains.

• Revenue improved year over year. Q1 2026 revenue rose to $61.7 million from $58.9 million in Q4 2025 and $59.5 million in Q2 2025, showing a modest rebound in top-line momentum.
• Operating income turned nearly breakeven. Q1 2026 operating income was $242,000, a big improvement from the prior quarter’s $547,000 and well ahead of the much weaker Q1 2025 result.
• Cash from operations stayed positive. QRHC generated $190,000 of operating cash flow in Q1 2026, which is small but better than the negative operating cash flow seen in several earlier periods.
• Cash balance increased slightly. Cash and equivalents ended Q1 2026 at $1.14 million, up from $1.15 million in Q3 2025 and well above the low point seen in Q2 2025.
• Balance sheet equity remained positive. Total common equity was $38.7 million at the end of Q1 2026, indicating the company is still carrying a positive book-equity position.
• Gross margin remains relatively stable. Gross profit was $9.7 million on $61.7 million of revenue, keeping gross margin in the mid-teens range, roughly in line with recent quarters.
• Share count appears fairly steady. Weighted average diluted shares were about 21.2 million, suggesting no major dilution pressure in the quarter.
• Net loss widened versus the operating result. Despite near-breakeven operations, Q1 2026 ended with a net loss of $2.3 million because financing costs remained high.
• Interest expense is still a major burden. Interest expense was $2.5 million in Q1 2026, far larger than operating income and the main reason earnings stayed negative.
• Leverage remains elevated. QRHC reported $63.4 million of long-term debt and $0.5 million of short-term debt, versus only $1.1 million of cash, leaving the company highly levered.

Looking at the multi-year trend, the most important takeaway is that Quest Resource has improved operationally from the very weak periods in 2024 and early 2025, when it posted larger losses and even negative operating cash flow in some quarters. However, the business still carries a heavy debt load and large interest expense, so even a decent operating quarter is not enough to produce bottom-line profitability.

Investors should also note that the balance sheet is still dominated by goodwill and intangible assets, while retained earnings remain deeply negative at $(142.8) million. That tells you the company has accumulated substantial historical losses and that future progress will likely depend on sustained revenue growth, tighter expense control, and some form of debt reduction.

Bottom line: QRHC is showing signs of operational stabilization, but the stock still looks like a turnaround story with meaningful financial risk. The key question for investors is whether management can keep improving operating income fast enough to offset the company’s debt service burden.