SunLink Health Systems, Inc. Announces Fiscal 2019 First Quarter Results

ATLANTA--()--SunLink Health Systems, Inc. (NYSE American: SSY) today announced a loss from continuing operations of $817,000 (a loss of $0.11 per fully diluted share) for its first fiscal quarter ended September 30, 2018 compared to a loss of $224,000, (a loss of $0.02 per fully diluted share) for the quarter ended September 30, 2017. Net loss for the quarter ended September 30, 2018 was a loss of $880,000 (a loss of $0.12 per fully diluted share) compared to a net loss of $277,000 (a loss of $0.03 per fully diluted share) for the quarter ended September 30, 2017.

Consolidated net revenues from continuing operations for the quarters ended September 30, 2018 and 2017 were $12,052,000 and $13,243,000, respectively, a decrease of 9% in the current fiscal year’s first quarter compared to the comparable quarter of the prior fiscal year. Healthcare Services Segment net revenues of $5,536,000 for the quarter ended September 30, 2018 decreased $118,000 (2%) primarily due to decreased Medicare net revenues. The Pharmacy Segment revenues of $6,516,000 in the quarter ended September 30, 2018 reflected a decrease of $1,073,000, (14%) below revenues for the comparable quarter of the prior fiscal year. The decrease in Pharmacy Segment revenues was due primarily to the sale of one of two retail pharmacy locations in January 2018 and higher durable medical equipment revenues in the preceding year which were realized from a temporary adjustment in Medicare reimbursement under the provisions of the 21st Century Act.

SunLink incurred an operating loss for the quarter ended September 30, 2018 of $758,000, compared to an operating loss for the quarter ended September 30, 2017 of $99,000. The increased loss in the current year resulted from lower net revenues and from higher salaries, wages and benefits as a percentage of net revenues.

Loss from discontinued operations was $63,000 ($0.01 per fully diluted share) for the quarter ended September 30, 2018 compared to a loss from discontinued operations of $53,000 ($0.01 per fully diluted share) for the quarter ended September 30, 2017. The loss from discontinued operations for the current fiscal quarter resulted primarily from certain retained liabilities from sold facilities.

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, 2018 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 quarter ended September 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, and gains on sale of businesses.

   
Fiscal Quarters Ended
September 30,
2018     2017
 
Healthcare Services Adjusted EBITDA $ (85,000 ) $ 101,000
Pharmacy Adjusted EBITDA 199,000 693,000
Corporate Overhead Adjusted EBITDA (454,000 ) (465,000 )
Taxes and interest expense (61,000 ) (127,000 )

Other non-cash expenses and net change in operating assets and liabilities

  859,000     31,000  
Net cash provided by operations $ 458,000   $ 233,000  
 
 
SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES
FISCAL 2019 FIRST QUARTER RESULTS

Amounts in 000’s, except per share and volume amounts

               
CONSOLIDATED STATEMENTS OF EARNINGS
 
Three Months Ended SEPTEMBER 30,
2018 2017
% of Net % of Net
Amount Revenues Amount Revenues
Net Revenues $ 12,052 100.0 % $ 13,243 100.0 %
Costs and Expenses:
Cost of goods sold 3,917 32.5 % 4,458 33.7 %
Salaries, wages and benefits 5,947 49.3 % 5,764 43.5 %
Supplies 410 3.4 % 425 3.2 %
Purchased services 707 5.9 % 687 5.2 %
Other operating expenses 1,274 10.6 % 1,442 10.9 %
Rents and leases 137 1.1 % 154 1.2 %
Depreciation and amortization 418 3.5 % 429 3.2 %
Electronic Health Records incentive programs   0     0.0 %   (17 ) -0.1 %
Operating Loss (758 ) -6.3 % (99 ) -0.7 %
 
Interest Expense - net (61 ) -0.5 % (127 ) -1.0 %
Gains on sale of assets   2     0.0 %   2   0.0 %
 
Loss from Continuing Operations before
Income Taxes (817 ) -6.8 % (224 ) -1.7 %
Income Tax expense   0     0.0 %   0   0.0 %
Loss from Continuing Operations (817 ) -6.8 % (224 ) -1.7 %
Loss from Discontinued Operations, net of tax   (63 )   -0.5 %   (53 ) -0.4 %
Net Loss $ (880 )   -7.3 % $ (277 ) -2.1 %
Loss Per Share from Continuing Operations:
Basic $ (0.11 ) $ (0.02 )
Diluted $ (0.11 ) $ (0.02 )
Loss Per Share from Discontinued Operations:
Basic $ (0.01 ) $ (0.01 )
Diluted $ (0.01 ) $ (0.01 )
Net Loss Per Share:
Basic $ (0.12 ) $ (0.03 )
Diluted $ (0.12 ) $ (0.03 )
Weighted Average Common Shares Outstanding:
Basic   7,347     9,163  
Diluted   7,347     9,163  
 
HEALTHCARE FACILITIES VOLUME STATISTICS
 
Hospital and Nursing Home Admissions 151 166
Hospital and Nursing Home Patient Days 14,838 14,745
 
SUMMARY BALANCE SHEETS September 30, June 30,
2018 2018
ASSETS
Cash and Cash Equivalents $ 3,393 $ 3,456
Accounts Receivable - net 4,606 4,823
Other Current Assets 4,592 4,831
Property Plant and Equipment, net 10,474 10,406
Long-term Assets   2,648     2,660  
$ 25,713   $ 26,176  
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $ 5,398 $ 4,851
Long-term Debt and Other Noncurrent Liabilities 4,008 4,139
Shareholders' Equity   16,307     17,186  
$ 25,713   $ 26,176  
 

Contacts

Robert M. Thornton, Jr.
Chief Executive Officer
(770) 933-7004

Contacts

Robert M. Thornton, Jr.
Chief Executive Officer
(770) 933-7004