SunLink Health Systems, Inc. Announces Fiscal 2019 Fourth Quarter and Annual Results

ATLANTA--()--SunLink Health Systems, Inc. (NYSE American: SSY) today announced a loss from continuing operations of $1,143,000 (a loss of $0.16 per fully diluted share) for its fourth fiscal quarter ended June 30, 2019 compared to a loss of $609,000, (a loss of $0.08 per fully diluted share) for the quarter ended June 30, 2018. Net loss for the quarter ended June 30, 2019 was a loss of $2,221,000 (a loss of $0.32 per fully diluted share) compared to a net loss of $1,454,000 ( loss of $0.20 per fully diluted share) for the quarter ended June 30, 2018.

Consolidated net revenues from continuing operations for the quarters ended June 30, 2019 and 2018 were $10,899,000 and $10,219,000, respectively, an increase of 7% in the current fiscal year’s fourth quarter compared to the comparable quarter of the prior fiscal year. Net revenues increased in the current fiscal quarter primarily due to increased nursing home net revenues and increased institutional pharmacy and durable medical equipment revenues.

SunLink incurred an operating loss for the quarter ended June 30, 2019 of $966,000, compared to an operating loss for the quarter ended June 30, 2018 of $614,000.

Loss from discontinued operations was $1,078,000 (a loss of $0.15 per fully diluted share) for the quarter ended June 30, 2019 compared to a loss from discontinued operations of $845,000 ($0.11 per fully diluted share) for the quarter ended June 30, 2018. The current year discontinued operations results include expenses incurred in connection with prior year Medicare and Medicaid cost reports settlements and retained professional liability claims expense of sold businesses.

For the fiscal year ended June 30, 2019, SunLink reported a loss from continuing operations of $1,996,000 (a loss of $0.28 per fully diluted share) compared to a loss from continuing operations of $226,000 (a loss of $0.03 per fully diluted share) for the prior year. For the fiscal year ended June 30, 2019, SunLink reported a net loss of $1,754,000 ($0.25 per fully diluted share) compared to a net loss of $1,593,000 (or a loss of $0.19 per fully diluted share) for the fiscal year ended June 30, 2018. Earnings from discontinued operations were $242,000 ($0.03 per fully diluted share) for the fiscal year ended June 30, 2019 compared to a loss from discontinued operations of $1,367,000 (or a loss of $0.17 per fully diluted share) for the fiscal year ended June 30, 2018.

Significant items included the results for the fiscal years ended June 30, 2019 and 2018 include:

Fiscal year ended June 30, 2019:

  • The Company sold a vacant medical office building and approximately two adjacent acres of undeveloped land in October 2018 for approximately $935,000, resulting in a pre-tax gain of $452,000, which is included in continuing operations results for the year ended June 30, 2019.
  • The Company sold a nursing home and related real estate in March 2019 for approximately $7,300,000 resulting in a pre-tax gain on the sale of $2,136,000, which is included in discontinued operations.
  • During the quarter ended June 30, 2019, the Company increased reserves of approximately $610,000 for four professional liability and litigation claims relating to facilities which have been sold and which are recorded in discontinued operations for the year ended June 30, 2019.
  • During the quarter ended June 30, 2019, the Company recorded expense of approximately $605,000 due to adjustments to a prior year Medicaid cost report of a hospital previously sold. This expense is included in discontinued operations for the year ended June 30, 2019.

Fiscal year ended June 30, 2018:

  • The Pharmacy Segment subsidiary received approximately $944,000 for economic damages in connection with the Deepwater Horizon Settlement Program, which occurred in 2010. The pre-tax net settlement was recognized as a continuing operations gain in the year ended June 30, 2018.
  • In January 2018, Carmichael’s Cashway Pharmacy, Inc., a wholly owned subsidiary of the Company, sold the assets of a retail pharmacy it operated for approximately $410,000 resulting in a pre-tax gain of approximately $183,000, which is included in continuing operations for the year ended June 30, 2018.

SunLink had approximately 6% and 14% fewer fully diluted weighted average common shares outstanding for the three and twelve months ended June 30, 2019 due to share repurchases in December 2017 and December 2018.

Consolidated net revenues from continuing operations for the fiscal years ended June 30, 2019 and 2018 were $45,618,000 and $45,209,000, respectively, an increase of 1% in the current fiscal year. The increase in net revenues in the fiscal year ended June 30, 2019 over the prior year was primarily due to increased institutional pharmacy and durable medical equipment net revenues.

SunLink had an operating loss from continuing operations for the fiscal year ended June 30, 2019 of $2,314,000, compared to an operating loss for the fiscal year ended June 30, 2018 of $1,112,000, including the items described above.

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.

SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES
FISCAL 2019 FOURTH QUARTER AND ANNUAL RESULTS
Amounts in 000's, except per share and volume amounts
 
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

Three Months Ended June 30,

Twelve Months Ended June 30,

2019

2018

2019

2018

 

% of Net

 

% of Net

 

% of Net

 

% of Net

Amount

Revenues

Amount

Revenues

Amount

Revenues

Amount

Revenues

Net Revenues

$ 10,899

100.0%

$ 10,219

100.0%

45,618

100.0%

45,209

100.0%

Costs and Expenses:
Cost of goods sold

4,230

38.8%

3,906

38.2%

18,941

41.5%

18,529

41.0%

Salaries, wages and benefits

4,966

45.6%

4,542

44.4%

19,191

42.1%

18,610

41.2%

Supplies

299

2.7%

280

2.7%

1,241

2.7%

1,238

2.7%

Purchased services

691

6.3%

563

5.5%

2,508

5.5%

2,162

4.8%

Other operating expenses

1,037

9.5%

955

9.3%

3,895

8.5%

3,657

8.1%

Rents and leases

151

1.4%

152

1.5%

609

1.3%

615

1.4%

Impairments

129

1.2%

0

0.0%

129

0.3%

0

0.0%

Depreciation and amortization

430

3.9%

435

4.3%

1,486

3.3%

1,531

3.4%

Electronic Health Records incentive programs

(68)

-0.6%

0

0.0%

(68)

-0.1%

(21)

0.0%

Operating Loss

(966)

-8.9%

(614)

-6.0%

(2,314)

-5.1%

(1,112)

-2.5%

 
Interest Expense - net

(56)

-0.5%

(57)

-0.6%

(241)

-0.5%

(359)

-0.8%

Gain on economic damages claim, net

22

0.2%

0

0.0%

22

0.0%

944

2.1%

Loss on extinguishment of debt, net

0

0.0%

0

0.0%

0

0.0%

(238)

-0.5%

Gains on sale of assets

1

0.0%

13

0.1%

455

1.0%

194

0.4%

 
Earnings (Loss) from Continuing Operations before Income Taxes

(999)

-9.2%

(658)

-6.4%

(2,078)

-4.6%

(571)

-1.3%

Income Tax expense (benefit)

144

1.3%

(49)

-0.5%

(82)

-0.2%

(345)

-0.8%

Earnings (Loss) from Continuing Operations

(1,143)

-10.5%

(609)

-6.0%

(1,996)

-4.4%

(226)

-0.5%

Earnings (Loss) from Discontinued Operations, net of tax

(1,078)

-9.9%

(845)

-8.3%

242

0.5%

(1,367)

-3.0%

Net Earnings (Loss)

$ (2,221)

-20.4%

$ (1,454)

-14.2%

$ (1,754)

-3.8%

$ (1,593)

-3.5%

Earnings (Loss) Per Share from Continuing Operations:
Basic

$ (0.16)

$ (0.08)

$ (0.28)

$ (0.03)

Diluted

$ (0.16)

$ (0.08)

$ (0.28)

$ (0.03)

Earnings (Loss) Per Share from Discontinued Operations:
Basic

$ (0.15)

$ (0.11)

$ 0.03

$ (0.17)

Diluted

$ (0.15)

$ (0.11)

$ 0.03

$ (0.17)

Net Earnings (Loss) Per Share:
Basic

$ (0.32)

$ (0.20)

$ (0.25)

$ (0.19)

Diluted

$ (0.32)

$ (0.20)

$ (0.25)

$ (0.19)

Weighted Average Common Shares Outstanding:
Basic

6,987

7,398

7,149

8,283

Diluted

6,987

7,398

7,149

8,283

 
HEALTHCARE FACILITIES VOLUME STATISTICS
 
Hospital and Nursing Home Admissions

112

134

487

518

Hospital and Nursing Home Patient Days

6,591

6,402

26,780

25,432

 
SUMMARY BALANCE SHEETS

June 30,

June 30,

2019

2018

ASSETS
Cash and Cash Equivalents

$ 7,742

$ 3,456

Accounts Receivable - net

4,715

4,823

Other Current Assets

4,201

4,831

Property Plant and Equipment, net

5,243

5,896

Long-term Assets

2,518

7,170

$ 24,419

$ 26,176

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities

$ 8,410

$ 4,851

Long-term Debt and Other Noncurrent Liabilities

966

4,139

Shareholders' Equity

15,043

17,186

$ 24,419

$ 26,176

 

Contacts

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

Contacts

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