SunLink Health Systems, Inc. (NYSE American: SSY) today announced a Loss from Continuing Operations of $604,000, or a loss of $0.08 per fully diluted share, for its third fiscal quarter ended March 31, 2018 compared to a Loss from Continuing Operations of $890,000, or a loss of $0.10 per fully diluted share, for the quarter ended March 31, 2017. The Net Loss for the quarter ended March 31, 2018 was $588,000, or a loss of $0.08 per fully diluted share compared to a Net Loss of $1,025,000, or a loss of $0.11 per fully diluted share, for the quarter ended March 31, 2017. Weighted average common shares outstanding for the quarter ended March 31, 2018 were 7,417,000 compared to 9,334,000 for the same quarter last year as a primarily as a result of the 1,746,000 common shares repurchased by the Company in December 2017.
Consolidated Net Revenues for the quarters ended March 31, 2018 and 2017 were $13,417,000 and $13,699,000, respectively, a decrease of 2% in the current year’s third fiscal quarter compared to the comparable quarter of the prior fiscal year. Healthcare Services segment net revenues of $5,657,000 for the quarter ended March 31, 2018 increased $156,000 (3%) over last year’s third quarter primarily due to increased nursing home revenues and reduced bad debts. Pharmacy segment net revenues of $7,760,000 in the quarter ended March 31, 2018 decreased $438,000 (5%) from the comparable quarter of the prior fiscal year due to decreased revenues in both Retail and Institutional Pharmacy operations this year.
SunLink reported an Operating Loss for the quarter ended March 31, 2018 of $731,000, compared to a $771,000 Operating Loss for the quarter ended March 31, 2017. The quarter ended March 31, 2018 includes a $183,000 gain on the January 2018 sale of certain Retail Pharmacy assets. Interest Expense of $56,000 for the quarter ended March 31, 2018 reflected a decrease of $73,000 from the quarter ended March 31, 2017 as a result of the $3,856,000 in debt repayments during the nine months ended March 31, 2018.
Earnings from Discontinued Operations were $16,000, or $0.00 per fully diluted share, for the quarter ended March 31, 2018 compared to a Loss from Discontinued Operations of $135,000, or a loss of $0.01 per fully diluted share, for the quarter ended March 31, 2017.
For the nine months ended March 31, 2018, SunLink reported a Loss from Continuing Operations of $29,000, or a loss of $0.00 per fully diluted share, compared to Earnings from Continuing Operations of $809,000, $0.09 per fully diluted share, for the comparable nine month period of the prior year. The Loss from Continuing Operations for the nine months period ended March 31, 2018 as compared to Earnings from Continuing Operations for the nine month period last year results from the significantly lower gains on the sale of assets during the first nine months of fiscal 2018. For the nine months ended March 31, 2018, SunLink reported a Net Loss of $139,000, or a loss of $0.02 per fully diluted share, compared to Net Earnings of $5,096,000, $0.54 per fully diluted share, for the nine months ended March 31, 2017. Loss from Discontinued Operations was $110,000, or a loss of $0.01 per fully diluted share, for the nine months ended March 31, 2018 compared to Earnings from Discontinued Operations of $4,287,000, $0.45 per fully diluted share, for the nine months ended March 31, 2017. The Earnings from Discontinued Operations for the nine months of the prior year resulted from a pre-tax gain of $7,270,000 on the August 2016 sale of a hospital.
Consolidated Net Revenues for the nine months ended March 31, 2018 and 2017 were $40,658,000 and $41,000,000 respectively, a decrease of 1% in the current nine months. Healthcare Services Segment net revenues in the nine months ended March 31, 2018 of $17,033,000 represented a decrease of $21,000 (1%) resulting from lower nursing home revenues in the first nine months of the fiscal year. The Pharmacy Segment net revenues of $23,625,000 in the nine months ended March 31, 2018 represented a decrease of $321,000, (1%) from the comparable nine months of the prior year due primarily to lower Retail and Institutional Pharmacy revenues.
SunLink had an Operating Loss for the nine months ended March 31, 2018 of $910,000, compared to an Operating Loss for the nine months ended March 31, 2017 of $1,696,000.
SunLink Health Systems, Inc. is the parent company of subsidiaries that own and operate healthcare businesses in the Southeast. Each of the Company’s healthcare 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 used in operations for the nine months ended March 31, 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.
| Nine Months Ended | |||||||||||
| March 31, | |||||||||||
| 2018 | 2017 | ||||||||||
| Healthcare Services Adjusted EBITDA | $ | 603,000 | $ | 709,000 | |||||||
| Pharmacy Adjusted EBITDA | 1,130,000 | 299,000 | |||||||||
| Corporate Overhead Adjusted EBITDA | (1,311,000 | ) | (1,328,000 | ) | |||||||
| Taxes and interest expense | (6,000 | ) | (271,000 | ) | |||||||
Other non-cash expenses and net change in operating assets and liabilities | (449,000 | ) | (4,408,000 | ) | |||||||
| Net cash provided by (used in) operations | $ | (33,000 | ) | $ | (4,999,000 | ) | |||||
| SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES | ||||||||||||||||||||||||||||||||||||||
| FISCAL 2018 THIRD QUARTER RESULTS | ||||||||||||||||||||||||||||||||||||||
| Amounts in 000's, except per share and volume amounts | ||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||||||||||||||||||||||||
| 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) | $ | 13,550 | 101.0 | % | $ | 13,883 | 101.3 | % | $ | 41,021 | 100.9 | % | $ | 41,321 | 100.8 | % | ||||||||||||||||||||||
| Less provision for bad debts of Healthcare Facilities Segment | 133 | 1.0 | % | 184 | 1.3 | % | 363 | 0.9 | % | 321 | 0.8 | % | ||||||||||||||||||||||||||
| Net Revenues | 13,417 | 100.0 | % | 13,699 | 100.0 | % | 40,658 | 100.0 | % | 41,000 | 100.0 | % | ||||||||||||||||||||||||||
| Costs and Expenses: | ||||||||||||||||||||||||||||||||||||||
| Cost of goods sold | 5,073 | 37.8 | % | 5,523 | 40.3 | % | 14,623 | 36.0 | % | 15,592 | 38.0 | % | ||||||||||||||||||||||||||
| Salaries, wages and benefits | 6,045 | 45.1 | % | 5,872 | 42.9 | % | 17,697 | 43.5 | % | 17,476 | 42.6 | % | ||||||||||||||||||||||||||
| Provision for bad debts of Specialty Pharmacy Segment | 237 | 1.8 | % | 126 | 0.9 | % | 445 | 1.1 | % | 342 | 0.8 | % | ||||||||||||||||||||||||||
| Supplies | 448 | 3.3 | % | 455 | 3.3 | % | 1,361 | 3.3 | % | 1,373 | 3.3 | % | ||||||||||||||||||||||||||
| Purchased services | 672 | 5.0 | % | 692 | 5.1 | % | 2,021 | 5.0 | % | 2,113 | 5.2 | % | ||||||||||||||||||||||||||
| Other operating expenses | 1,052 | 7.8 | % | 1,194 | 8.7 | % | 3,639 | 9.0 | % | 4,015 | 9.8 | % | ||||||||||||||||||||||||||
| Rents and leases | 157 | 1.2 | % | 142 | 1.0 | % | 471 | 1.2 | % | 409 | 1.0 | % | ||||||||||||||||||||||||||
| Depreciation and amortization | 464 | 3.5 | % | 466 | 3.4 | % | 1,332 | 3.3 | % | 1,376 | 3.4 | % | ||||||||||||||||||||||||||
| Electronic Health Records incentive programs | - | 0.0 | % | - | 0.0 | % | (21 | ) | -0.1 | % | - | 0.0 | % | |||||||||||||||||||||||||
| Operating Loss | (731 | ) | -5.4 | % | (771 | ) | -5.6 | % | (910 | ) | -2.2 | % | (1,696 | ) | -4.1 | % | ||||||||||||||||||||||
| Interest Expense - net | (56 | ) | -0.4 | % | (129 | ) | -0.9 | % | (302 | ) | -0.7 | % | (507 | ) | -1.2 | % | ||||||||||||||||||||||
| Gain on economic damages claim, net | - | 0.0 | % | - | 0.0 | % | 944 | 2.3 | % | - | 0.0 | % | ||||||||||||||||||||||||||
| Loss on extinguishment of debt, net | - | 0.0 | % | - | 0.0 | % | (238 | ) | -0.6 | % | (243 | ) | -0.6 | % | ||||||||||||||||||||||||
| Gain on sale of assets | 183 | 1.4 | % | 2 | 0.0 | % | 181 | 0.4 | % | 3,019 | 7.4 | % | ||||||||||||||||||||||||||
Earnings (Loss) from Continuing Operations before Income Taxes | (604 | ) | -4.5 | % | (898 | ) | -6.6 | % | (325 | ) | -0.8 | % | 573 | 1.4 | % | |||||||||||||||||||||||
| Income Tax Benefit | - | 0.0 | % | (8 | ) | -0.1 | % | (296 | ) | -0.7 | % | (236 | ) | -0.6 | % | |||||||||||||||||||||||
| Earnings (Loss) from Continuing Operations | (604 | ) | -4.5 | % | (890 | ) | -6.5 | % | (29 | ) | -0.1 | % | 809 | 2.0 | % | |||||||||||||||||||||||
| Earnings (Loss) from Discontinued Operations, net of tax | 16 | 0.1 | % | (135 | ) | -1.0 | % | (110 | ) | -0.3 | % | 4,287 | 10.5 | % | ||||||||||||||||||||||||
| Net (Loss) Earnings | $ | (588 | ) | -4.4 | % | $ | (1,025 | ) | -7.5 | % | $ | (139 | ) | -0.3 | % | $ | 5,096 | 12.4 | % | |||||||||||||||||||
| Earnings (Loss) Per Share from Continuing Operations: | ||||||||||||||||||||||||||||||||||||||
| Basic | $ | (0.08 | ) | $ | (0.10 | ) | $ | (0.00 | ) | $ | 0.09 | |||||||||||||||||||||||||||
| Diluted | $ | (0.08 | ) | $ | (0.10 | ) | $ | (0.00 | ) | $ | 0.09 | |||||||||||||||||||||||||||
| Earnings (Loss) Per Share from Discontinued Operations: | ||||||||||||||||||||||||||||||||||||||
| Basic | $ | 0.00 | $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.46 | ||||||||||||||||||||||||||||
| Diluted | $ | 0.00 | $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.45 | ||||||||||||||||||||||||||||
| Net Earnings (Loss) Per Share: | ||||||||||||||||||||||||||||||||||||||
| Basic | $ | (0.08 | ) | $ | (0.11 | ) | $ | (0.02 | ) | $ | 0.54 | |||||||||||||||||||||||||||
| Diluted | $ | (0.08 | ) | $ | (0.11 | ) | $ | (0.02 | ) | $ | 0.54 | |||||||||||||||||||||||||||
| Weighted Average Common Shares Outstanding: | ||||||||||||||||||||||||||||||||||||||
| Basic | 7,417 | 9,334 | 8,564 | 9,408 | ||||||||||||||||||||||||||||||||||
| Diluted | 7,417 | 9,334 | 8,564 | 9,429 | ||||||||||||||||||||||||||||||||||
| HEALTHCARE FACILITIES VOLUME STATISTICS | ||||||||||||||||||||||||||||||||||||||
| Hospital and Nursing Home Admissions | 196 | 154 | 518 | 399 | ||||||||||||||||||||||||||||||||||
| Hospital and Nursing Home Patient Days | 13,876 | 14,561 | 42,749 | 45,268 | ||||||||||||||||||||||||||||||||||
| SUMMARY BALANCE SHEETS | March 31, | June 30, | ||||||||||||||||||||||||||||||||||||
| 2018 | 2017 | |||||||||||||||||||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents | $ | 3,541 | $ | 10,494 | ||||||||||||||||||||||||||||||||||
| Accounts Receivable - net | 5,884 | 5,906 | ||||||||||||||||||||||||||||||||||||
| Other Current Assets | 5,057 | 6,221 | ||||||||||||||||||||||||||||||||||||
| Property Plant and Equipment, net | 10,544 | 10,290 | ||||||||||||||||||||||||||||||||||||
| Long-term Assets | 2,765 | 2,425 | ||||||||||||||||||||||||||||||||||||
| $ | 27,791 | $ | 35,336 | |||||||||||||||||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||||||||||||||
| Current Liabilities | $ | 5,285 | $ | 12,314 | ||||||||||||||||||||||||||||||||||
| Long-term Debt and Other Noncurrent Liabilities | 3,919 | 1,329 | ||||||||||||||||||||||||||||||||||||
| Shareholders' Equity | 18,587 | 21,693 | ||||||||||||||||||||||||||||||||||||
| $ | 27,791 | $ | 35,336 | |||||||||||||||||||||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180511005328/en/
Contacts:
Robert M. Thornton, Jr.,
770-933-7004
Chief Executive Officer
