ATLANTA--(BUSINESS WIRE)--SunLink Health Systems, Inc. (NYSE American: SSY) today announced a loss from continuing operations of $1,104,000 (a loss of $0.15 per fully diluted share) for its fourth fiscal quarter ended June 30, 2018 compared to a loss of $2,768,000, (a loss of $0.30 per fully diluted share) for the quarter ended June 30, 2017. Net loss for the quarter ended June 30, 2018 was a loss of $1,454,000 (a loss of $0.20 per fully diluted share) compared to a net loss of $2,408,000 ( loss of $0.26 per fully diluted share) for the quarter ended June 30, 2017.
Consolidated net revenues from continuing operations for the quarters ended June 30, 2018 and 2017 were $12,214,000 and $12,288,000, respectively, a decrease of 1% in the current fiscal year’s fourth quarter compared to the comparable quarter of the prior fiscal year. Healthcare Services Segment net revenues of $5,672,000 for the quarter ended June 30, 2018 increased $344,000 (7%) primarily due to a 2% increase in hospital and nursing home admissions. The Pharmacy Segment revenues of $6,542,000 in the quarter ended June 30, 2018 decreased $418,000, (6%) below revenues for the comparable quarter of the prior fiscal year due to lower revenues in retail and institutional pharmacy product categories.
SunLink had an operating loss for the quarter ended June 30, 2018 of $1,084,000, compared to an operating loss for the quarter ended June 30, 2017 of $2,814,000. The quarter ended June 30, 2017 included an impairment charge of $1,427,000.
Loss from discontinued operations was $350,000 ($0.05 per fully diluted share) for the quarter ended June 30, 2018 compared to earnings from discontinued operations of $360,000 ($0.04 per fully diluted share) for the quarter ended June 30, 2017. The loss from discontinued operations for the current fiscal year resulted primarily from certain retained liabilities from sold facilities.
For the fiscal year ended June 30, 2018, SunLink reported a loss from continuing operations of $1,133,000 (a loss of $0.14 per fully diluted share) compared to a loss of $1,959,000 (a loss of $0.21 per fully diluted share) for the comparable period of the prior fiscal year. For the fiscal year ended June 30, 2018, SunLink reported a net loss of $1,593,000 (a loss of $0.19 per fully diluted share) compared to net earnings of $2,688,000 ($0.29 per fully diluted share) for the fiscal year ended June 30, 2017. The 2018 fiscal year results included a $944,000 gain on economic damages claim, net of expenses, resulting from a recovery under the Deep Water Horizon Settlement Program. The fiscal 2017 results included an impairment charge of $1,427,000. Loss from discontinued operations was $460,000 (a loss of $0.06 per share) for the fiscal year ended June 30, 2018 compared to earnings from discontinued operations of $4,647,000 ($0.50 per fully diluted share) for the fiscal year ended June 30, 2017. The earnings from discontinued operations for the prior fiscal year resulted from a pre-tax gain of $7,265,000 on the August 2016 sale of a hospital.
Consolidated net revenues from continuing operations for the fiscal year ended June 30, 2018 and 2017 were $52,872,000 and $53,288,000, respectively, a decrease of 1% in the current fiscal year. Healthcare Services Segment net revenues in the fiscal year ended June 30, 2018 of $22,705,000 represented an increase of $324,000 (1%) in the current fiscal year resulting primarily from increased hospital and nursing home admissions. The Pharmacy Segment revenues of $30,167,000 in the fiscal year ended June 30, 2018 represented a decrease of $740,000, (2%) below the comparable fiscal year of the prior fiscal year due primarily to lower retail and institutional pharmacy revenues.
SunLink had an operating loss for the fiscal year ended June 30, 2018 of $1,994,000, compared to an operating loss for the fiscal year ended June 30, 2017 of $4,510,000.
SunLink Health Systems, Inc. is the parent company of subsidiaries that own and operate healthcare properties and businesses in the Southeast. Each of the Company’s businesses is operated locally with a strategy of linking patients’ needs with healthcare professionals. For additional information on SunLink Health Systems, Inc., please visit the Company’s website.
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, statements regarding the company’s business strategy. These forward-looking statements are subject to certain risks, uncertainties and other factors, which could cause actual results, performance and achievements to differ materially from those anticipated. Certain of those risks, uncertainties and other factors are disclosed in more detail in the company’s Annual Report on Form 10-K for the year ended June 30, 2017 and other filings with the Securities and Exchange Commission which can be located at www.sec.gov.
Adjusted earnings before income taxes, interest, depreciation and amortization
Earnings before income taxes, interest, depreciation and amortization (“EBITDA”) represent the sum of income before income taxes, interest, depreciation and amortization. We understand that certain industry analysts and investors generally consider EBITDA to be one measure of the liquidity of the company, and it is presented to assist analysts and investors in analyzing the ability of the company to generate cash, service debt and to satisfy capital requirements. We believe increased EBITDA is an indicator of improved ability to service existing debt and to satisfy capital requirements. EBITDA, however, is not a measure of financial performance under accounting principles generally accepted in the United States of America and should not be considered an alternative to net income as a measure of operating performance or to cash liquidity. Because EBITDA is not a measure determined in accordance with accounting principles generally accepted in the United States of America and is thus susceptible to varying calculations, EBITDA, as presented, may not be comparable to other similarly titled measures of other corporations. Net cash provided by (used in) operations for the fiscal years ended June 30, 2018 and 2017, respectively, is shown below. Healthcare Services Adjusted EBITDA and Pharmacy Adjusted EBITDA is the EBITDA for those facilities without any allocation of corporate overhead, impairment charges, the Deepwater Horizon Settlement Program gain, and gains on sale of businesses.
| Fiscal Years Ended | |||||||||||
| June 30, | |||||||||||
| 2018 | 2017 | ||||||||||
| Healthcare Services Adjusted EBITDA | $ | 471,000 | $ | 195,000 | |||||||
| Pharmacy Adjusted EBITDA | 1,070,000 | 440,000 | |||||||||
| Corporate Overhead Adjusted EBITDA | (1,677,000 | ) | (1,804,000 | ) | |||||||
| Taxes and interest expense | (14,000 | ) | (366,000 | ) | |||||||
|
Other non-cash expenses and net change in operating assets and liabilities |
546,000 | (4,075,000 | ) | ||||||||
| Net cash provided by (used in) operations | $ | 396,000 | $ | (5,610,000 | ) | ||||||
| SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES | ||||||||||||||||||||||||||||||||||||||
| FISCAL 2018 FOURTH QUARTER RESULTS | ||||||||||||||||||||||||||||||||||||||
| Amounts in 000's, except per share and volume amounts | ||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | Twelve Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||||||||||||
| % of Net | % of Net | % of Net | % of Net | |||||||||||||||||||||||||||||||||||
| Amount | Revenues | Amount | Revenues | Amount | Revenues | Amount | Revenues | |||||||||||||||||||||||||||||||
| Operating revenues (net of contractual allowances) | $ | 12,360 | 101.2 | % | $ | 12,445 | 101.3 | % | $ | 53,381 | 101.0 | % | $ | 53,766 | 100.9 | % | ||||||||||||||||||||||
| Less provision for bad debts of Healthcare Facilities Segment | 146 | 1.2 | % | 157 | 1.3 | % | 509 | 1.0 | % | 478 | 0.9 | % | ||||||||||||||||||||||||||
| Net Revenues | 12,214 | 100.0 | % | 12,288 | 100.0 | % | 52,872 | 100.0 | % | 53,288 | 100.0 | % | ||||||||||||||||||||||||||
| Costs and Expenses: | ||||||||||||||||||||||||||||||||||||||
| Cost of goods sold | 3,906 | 32.0 | % | 4,325 | 35.2 | % | 18,529 | 35.0 | % | 19,917 | 37.4 | % | ||||||||||||||||||||||||||
| Salaries, wages and benefits | 5,854 | 47.9 | % | 5,902 | 48.0 | % | 23,551 | 44.5 | % | 23,378 | 43.9 | % | ||||||||||||||||||||||||||
| Provision for bad debts of Specialty Pharmacy Segment | 258 | 2.1 | % | 96 | 0.8 | % | 703 | 1.3 | % | 438 | 0.8 | % | ||||||||||||||||||||||||||
| Supplies | 413 | 3.4 | % | 471 | 3.8 | % | 1,774 | 3.4 | % | 1,844 | 3.5 | % | ||||||||||||||||||||||||||
| Purchased services | 700 | 5.7 | % | 654 | 5.3 | % | 2,721 | 5.1 | % | 2,767 | 5.2 | % | ||||||||||||||||||||||||||
| Other operating expenses | 1,486 | 12.2 | % | 1,601 | 13.0 | % | 5,125 | 9.7 | % | 5,616 | 10.5 | % | ||||||||||||||||||||||||||
| Rents and leases | 155 | 1.3 | % | 152 | 1.2 | % | 626 | 1.2 | % | 561 | 1.1 | % | ||||||||||||||||||||||||||
| Impairments | - | 0.0 | % | 1,427 | 11.6 | % | - | 0.0 | % | 1,427 | 2.7 | % | ||||||||||||||||||||||||||
| Depreciation and amortization | 526 | 4.3 | % | 538 | 4.4 | % | 1,858 | 3.5 | % | 1,914 | 3.6 | % | ||||||||||||||||||||||||||
| Electronic Health Records incentive programs | - | 0.0 | % | (64 | ) | -0.5 | % | (21 | ) | 0.0 | % | (64 | ) | -0.1 | % | |||||||||||||||||||||||
| Operating Loss | (1,084 | ) | -8.9 | % | (2,814 | ) | -22.9 | % | (1,994 | ) | -3.8 | % | (4,510 | ) | -8.5 | % | ||||||||||||||||||||||
| Interest Expense - net | (57 | ) | -0.5 | % | (128 | ) | -1.0 | % | (359 | ) | -0.7 | % | (635 | ) | -1.2 | % | ||||||||||||||||||||||
| Gain on economic damages claim, net | - | 0.0 | % | - | 0.0 | % | 944 | 1.8 | % | - | 0.0 | % | ||||||||||||||||||||||||||
| Loss on extinguishment of debt, net | - | 0.0 | % | - | 0.0 | % | (238 | ) | -0.5 | % | (243 | ) | -0.5 | % | ||||||||||||||||||||||||
| Gain (loss) on sale of assets | (12 | ) | -0.1 | % | (102 | ) | -0.8 | % | 169 | 0.3 | % | 2,917 | 5.5 | % | ||||||||||||||||||||||||
|
Earnings (Loss) from Continuing Operations before Income Taxes |
(1,153 | ) | -9.4 | % | (3,044 | ) | -24.8 | % | (1,478 | ) | -2.8 | % | (2,471 | ) | -4.6 | % | ||||||||||||||||||||||
| Income Tax Benefit | (49 | ) | -0.4 | % | (276 | ) | -2.2 | % | (345 | ) | -0.7 | % | (512 | ) | -1.0 | % | ||||||||||||||||||||||
| Earnings (Loss) from Continuing Operations | (1,104 | ) | -9.0 | % | (2,768 | ) | -22.5 | % | (1,133 | ) | -2.1 | % | (1,959 | ) | -3.7 | % | ||||||||||||||||||||||
| Earnings (Loss) from Discontinued Operations, net of tax | (350 | ) | -2.9 | % | 360 | 2.9 | % | (460 | ) | -0.9 | % | 4,647 | 8.7 | % | ||||||||||||||||||||||||
| Net (Loss) Earnings | $ | (1,454 | ) | -11.9 | % | $ | (2,408 | ) | -19.6 | % | $ | (1,593 | ) | -3.0 | % | $ | 2,688 | 5.0 | % | |||||||||||||||||||
| Earnings (Loss) Per Share from Continuing Operations: | ||||||||||||||||||||||||||||||||||||||
| Basic | $ | (0.15 | ) | $ | (0.30 | ) | $ | (0.14 | ) | $ | (0.21 | ) | ||||||||||||||||||||||||||
| Diluted | $ | (0.15 | ) | $ | (0.30 | ) | $ | (0.14 | ) | $ | (0.21 | ) | ||||||||||||||||||||||||||
| Earnings (Loss) Per Share from Discontinued Operations: | ||||||||||||||||||||||||||||||||||||||
| Basic | $ | (0.05 | ) | $ | 0.04 | $ | (0.06 | ) | $ | 0.50 | ||||||||||||||||||||||||||||
| Diluted | $ | (0.05 | ) | $ | 0.04 | $ | (0.06 | ) | $ | 0.50 | ||||||||||||||||||||||||||||
| Net Earnings (Loss) Per Share: | ||||||||||||||||||||||||||||||||||||||
| Basic | $ | (0.20 | ) | $ | (0.26 | ) | $ | (0.19 | ) | $ | 0.29 | |||||||||||||||||||||||||||
| Diluted | $ | (0.20 | ) | $ | (0.26 | ) | $ | (0.19 | ) | $ | 0.29 | |||||||||||||||||||||||||||
| Weighted Average Common Shares Outstanding: | ||||||||||||||||||||||||||||||||||||||
| Basic | 7,398 | 9,163 | 8,283 | 9,346 | ||||||||||||||||||||||||||||||||||
| Diluted | 7,398 | 9,163 | 8,283 | 9,346 | ||||||||||||||||||||||||||||||||||
| HEALTHCARE FACILITIES VOLUME STATISTICS | ||||||||||||||||||||||||||||||||||||||
| Hospital and Nursing Home Admissions | 178 | 174 | 696 | 573 | ||||||||||||||||||||||||||||||||||
| Hospital and Nursing Home Patient Days | 15,076 | 14,488 | 57,825 | 59,756 | ||||||||||||||||||||||||||||||||||
| SUMMARY BALANCE SHEETS |
June 30, |
June 30, | ||||||||||||||||||||||||||||||||||||
| 2018 | 2017 | |||||||||||||||||||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents | $ | 3,456 | $ | 10,494 | ||||||||||||||||||||||||||||||||||
| Accounts Receivable - net | 4,823 | 5,906 | ||||||||||||||||||||||||||||||||||||
| Other Current Assets | 4,831 | 6,221 | ||||||||||||||||||||||||||||||||||||
| Property Plant and Equipment, net | 10,406 | 10,290 | ||||||||||||||||||||||||||||||||||||
| Long-term Assets | 2,660 | 2,425 | ||||||||||||||||||||||||||||||||||||
| $ | 26,176 | $ | 35,336 | |||||||||||||||||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||||||||||||||
| Current Liabilities | $ | 4,851 | $ | 12,314 | ||||||||||||||||||||||||||||||||||
| Long-term Debt and Other Noncurrent Liabilities | 4,139 | 1,329 | ||||||||||||||||||||||||||||||||||||
| Shareholders' Equity | 17,186 | 21,693 | ||||||||||||||||||||||||||||||||||||
| $ | 26,176 | $ | 35,336 | |||||||||||||||||||||||||||||||||||
