SunLink Health Systems, Inc. (NYSE MKT: SSY) today announced a loss from continuing operations for its third fiscal quarter ended March 31, 2016 of $1,714,000 or a loss of $0.18 per fully diluted share, compared to a loss from continuing operations of $316,000 or a loss of $0.03 per fully diluted share, for the quarter ended March 31, 2015. Net loss for the quarter ended March 31, 2016 was $1,835,000, or a loss of $0.19 per fully diluted share, compared to a net loss of $411,000, or a loss of $0.04 per fully diluted share, for the quarter ended March 31, 2015. The losses resulted primarily from lower inpatient volume and surgeries in the Healthcare Facilities Segment and the inability to reduce costs commensurate with the lower revenue.
Consolidated net revenues from continuing operations for the quarters ended March 31, 2016 and 2015 were $19,975,000 and $23,351,000, respectively, a decrease of 14% in the current year’s third quarter from the corresponding quarter of the prior year. Healthcare Facilities Segment net revenues in the third quarter of 2016 of $11,315,000 decreased $2,535,000, or 18%, compared to $13,850,000 for the comparable quarter of the prior year due to lower inpatient volume and surgeries. The Pharmacy Segment revenues of $8,509,000 for the quarter ended March 31, 2106 decreased $798,000, or 9%, over the comparable quarter of the prior year due primarily decreased sales to Institutional Pharmacy customers.
The company had an operating loss from continuing operations for the quarter ended March 31, 2016 of $1,508,000, compared to an operating loss from continuing operations for the quarter ended March 31, 2015 of $285,000. The operating loss in the current year’s quarter compared to the operating profit for the comparable quarter of last year was primarily due to the lower net revenues in the current year.
Loss from discontinued operations was $121,000 (a loss of $0.01 per fully diluted share) for the quarter ended March 31, 2016 compared to a loss from discontinued operations of $95,000 (a loss of $0.01 per fully diluted share) for the quarter ended March 31, 2015, respectively.
For the nine months ended March 31, 2016, SunLink reported a loss from continuing operations of $12,523,000 or a loss of $1.33 per fully diluted share, compared to earnings of $562,000, or $0.06 per fully diluted share, for the comparable period of the prior fiscal year. The nine month results for fiscal 2016 include the non-cash charge of $7,306,000 to fully reserve the company’s deferred tax assets. For the nine months ended March 31, 2016, SunLink reported a net loss of $12,849,000, or a loss of $1.36 per fully diluted share, compared to net earnings of $153,000 or $0.02 per share, for the nine months ended March 31, 2015.
Consolidated net revenues from continuing operations for the nine months ended March 31, 2016 decreased by 12% to $60,729,000 compared to $68,853,000 in the comparable period a year ago. The Healthcare Facilities Segment had net revenues in the nine months ended March 31, 2016 of $35,505,000 compared to $43,169,000 for the comparable period a year ago. The Pharmacy Segment had $24,644,000 of net revenues for the nine months ended March 31, 2016 compared to $25,191,000 for the comparable nine months of the prior fiscal year.
SunLink had an operating loss from continuing operations for the nine months ended March 31, 2016 of $5,046,000 compared to an operating profit of $2,042,000 for the nine months ended March 31, 2015
SunLink Health Systems, Inc. is the parent company of subsidiaries that operate three hospitals, two nursing homes and related healthcare services and facilities in the Southeast, and a pharmacy company in Louisiana. Each of the company’s healthcare services is operated locally with a strategy of linking patients’ needs with dedicated physicians and healthcare professionals to deliver quality efficient medical care. For additional information on SunLink Health Systems, Inc., please visit the company’s website at www.sunlinkhealth.com.
This press release may contain certain statements of a forward-looking nature. The statements contained herein which are not historical facts are considered forward-looking statements under federal securities laws. Such forward-looking statements are based on the beliefs of our management as well as assumptions made by and information currently available to them. The company has no obligation to update such forward-looking statements. Actual results may vary significantly from these forward-looking statements.
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 meet 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 operations for the three and nine months ended March 31, 2016 and 2015, respectively, is shown below. Healthcare Facilities 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.
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| March 31, | March 31, | ||||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Healthcare Facilities Adjusted EBITDA (loss) | $ | (618,000 | ) | $ | 493,000 | $ | (2,484,000 | ) | $ | 4,480,000 | |||||||||||
| Pharmacy Adjusted EBITDA | 246,000 | 342,000 | 882,000 | 893,000 | |||||||||||||||||
| Corporate overhead costs | (518,000 | ) | (518,000 | ) | (1,666,000 | ) | (1,514,000 | ) | |||||||||||||
| Taxes and interest (expense) benefit | (211,000 | ) | (213,000 | ) | (7,489,000 | ) | (1,493,000 | ) | |||||||||||||
| Other non-cash expenses and net change in | |||||||||||||||||||||
| operating assets and liabilities | 1,731,000 | 1,240,000 | 10,466,000 | (1,074,000 | ) | ||||||||||||||||
| Net cash provided by operations | $ | 630,000 | $ | 1,344,000 | $ | (291,000 | ) | $ | 1,292,000 | ||||||||||||
SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES | ||||||||||||||||||||||||||||||
FISCAL 2016 THIRD QUARTER RESULTS | ||||||||||||||||||||||||||||||
Amounts in 000's, except per share and volume amounts | ||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||||||||||||||||||||
Three Months Ended March 31, 2016 | Nine Months Ended March 31, | |||||||||||||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||||
| % of Net | % of Net | % of Net | % of Net | |||||||||||||||||||||||||||
| Amount | Revenues | Amount | Revenues | Amount | Revenues | Amount | Revenues | |||||||||||||||||||||||
Operating revenues (net of contractual allowances) | $ | 20,734 | 103.8 | % | $ | 25,196 | 107.9 | % | $ | 64,421 | 106.1 | % | $ | 74,913 | 108.8 | % | ||||||||||||||
| Less provision for bad debts of Healthcare Facilities Segment | 759 | 3.8 | % | 1,845 | 7.9 | % | 3,692 | 6.1 | % | 6,060 | 8.8 | % | ||||||||||||||||||
Net Revenues | 19,975 | 100.0 | % | 23,351 | 100.0 | % | 60,729 | 100.0 | % | 68,853 | 100.0 | % | ||||||||||||||||||
Costs and Expenses: | ||||||||||||||||||||||||||||||
| Cost of goods sold | 5,614 | 28.1 | % | 6,181 | 26.5 | % | 15,582 | 25.7 | % | 16,253 | 23.6 | % | ||||||||||||||||||
| Salaries, wages and benefits | 9,887 | 49.5 | % | 10,729 | 45.9 | % | 30,787 | 50.7 | % | 32,135 | 46.7 | % | ||||||||||||||||||
| Provision for bad debts of Specialty Pharmacy Segment | 69 | 0.3 | % | 65 | 0.3 | % | 429 | 0.7 | % | 188 | 0.3 | % | ||||||||||||||||||
| Supplies | 1,347 | 6.7 | % | 1,702 | 7.3 | % | 4,654 | 7.7 | % | 5,546 | 8.1 | % | ||||||||||||||||||
| Purchased services | 1,138 | 5.7 | % | 1,382 | 5.9 | % | 3,722 | 6.1 | % | 3,880 | 5.6 | % | ||||||||||||||||||
| Other operating expenses | 2,508 | 12.6 | % | 2,696 | 11.5 | % | 7,778 | 12.8 | % | 7,036 | 10.2 | % | ||||||||||||||||||
| Rents and leases | 302 | 1.5 | % | 343 | 1.5 | % | 945 | 1.6 | % | 1,020 | 1.5 | % | ||||||||||||||||||
| Insurance settlement | - | 0.0 | % | - | 0.0 | % | - | 0.0 | % | (1,000 | ) | -1.5 | % | |||||||||||||||||
| Depreciation and amortization | 618 | 3.1 | % | 602 | 2.6 | % | 1,778 | 2.9 | % | 1,817 | 2.6 | % | ||||||||||||||||||
| Electronic Health Records incentive programs | - | 0.0 | % | (64 | ) | -0.3 | % | 100 | 0.2 | % | (64 | ) | -0.1 | % | ||||||||||||||||
Operating Profit (Loss) | (1,508 | ) | -7.5 | % | (285 | ) | -1.2 | % | (5,046 | ) | -8.3 | % | 2,042 | 3.0 | % | |||||||||||||||
| Interest Expense - net | (211 | ) | -1.1 | % | (213 | ) | -0.9 | % | (637 | ) | -1.0 | % | (677 | ) | -1.0 | % | ||||||||||||||
| Gain (loss) on sale of assets | 5 | 0.0 | % | 13 | 0.1 | % | 12 | 0.0 | % | 13 | 0.0 | % | ||||||||||||||||||
Earnings (Loss) from Continuing Operations before | ||||||||||||||||||||||||||||||
| Income Taxes | (1,714 | ) | -8.6 | % | (485 | ) | -2.1 | % | (5,671 | ) | -9.3 | % | 1,378 | 2.0 | % | |||||||||||||||
Income Tax Expense (Benefit) | - | 0.0 | % | (169 | ) | -0.7 | % | 6,852 | 11.3 | % | 816 | 1.2 | % | |||||||||||||||||
earnings (Loss) from Continuing Operations | (1,714 | ) | -8.6 | % | (316 | ) | -1.4 | % | (12,523 | ) | -20.6 | % | 562 | 0.8 | % | |||||||||||||||
Loss from Discontinued Operations, net of tax | (121 | ) | -0.6 | % | (95 | ) | -0.4 | % | (326 | ) | -0.5 | % | (409 | ) | -0.6 | % | ||||||||||||||
| Net Earnings (Loss) | $ | (1,835 | ) | -9.2 | % | $ | (411 | ) | -1.8 | % | $ | (12,849 | ) | -21.2 | % | $ | 153 | 0.2 | % | |||||||||||
Earnings (Loss) Per Share from Continuing Operations: | ||||||||||||||||||||||||||||||
| Basic | $ | (0.18 | ) | $ | (0.03 | ) | $ | (1.33 | ) | $ | 0.06 | |||||||||||||||||||
| Diluted | $ | (0.18 | ) | $ | (0.03 | ) | $ | (1.33 | ) | $ | 0.06 | |||||||||||||||||||
Loss Per Share from Discontinued Operations: | ||||||||||||||||||||||||||||||
| Basic | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.04 | ) | ||||||||||||||||||
| Diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.04 | ) | ||||||||||||||||||
Net Earnings (Loss) Per Share: | ||||||||||||||||||||||||||||||
| Basic | $ | (0.19 | ) | $ | (0.04 | ) | $ | (1.36 | ) | $ | 0.02 | |||||||||||||||||||
| Diluted | $ | (0.19 | ) | $ | (0.04 | ) | $ | (1.36 | ) | $ | 0.02 | |||||||||||||||||||
Weighted Average Common Shares Outstanding: | ||||||||||||||||||||||||||||||
| Basic | 9,443 | 9,443 | 9,443 | 9,443 | ||||||||||||||||||||||||||
| Diluted | 9,443 | 9,433 | 9,443 | 9,481 | ||||||||||||||||||||||||||
HEALTHCARE FACILITIES VOLUME STATISTICS | ||||||||||||||||||||||||||||||
| Admissions | 344 | 621 | 1,176 | 1,913 | ||||||||||||||||||||||||||
| Equivalent Admissions | 1,304 | 1,673 | 4,468 | 5,409 | ||||||||||||||||||||||||||
| Surgeries | 190 | 381 | 882 | 1,209 | ||||||||||||||||||||||||||
| Net revenue per equivalent admission | $ | 8,677 | $ | 8,279 | $ | 7,947 | $ | 7,981 | ||||||||||||||||||||||
| SUMMARY BALANCE SHEETS | March 31, | June 30, | ||||||||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||||||||
| Cash and Cash Equivalents | $ | 3,889 | $ | 5,974 | ||||||||||||||||||||||||||
| Accounts Receivable - net | 8,463 | 9,625 | ||||||||||||||||||||||||||||
| Other Current Assets | 6,058 | 9,493 | ||||||||||||||||||||||||||||
| Property Plant and Equipment, net | 21,854 | 22,333 | ||||||||||||||||||||||||||||
| Long-term Assets | 4,655 | 9,703 | ||||||||||||||||||||||||||||
| $ | 44,919 | $ | 57,128 | |||||||||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||||||
| Current Liabilities | $ | 19,056 | $ | 10,764 | ||||||||||||||||||||||||||
| Long-term Debt and Other Noncurrent Liabilities | 5,104 | 12,804 | ||||||||||||||||||||||||||||
| Shareholders' Equity | 20,759 | 33,560 | ||||||||||||||||||||||||||||
| $ | 44,919 | $ | 57,128 | |||||||||||||||||||||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20160513005390/en/
Contacts:
Robert M. Thornton, Jr.,
770-933-7004
Chief Executive Officer
