SunLink Health Systems, Inc. Announces Fiscal 2025 Second Quarter Results

By: SunLink Health Systems, Inc. via Business Wire

February 12, 2025 at 16:44 PM EST

SunLink Health Systems, Inc. (NYSE American: SSY) today announced a loss from continuing operations of $1,070,000 (or a loss of $0.15 per fully diluted share) for its second fiscal quarter ended December 31, 2024 compared to a loss from continuing operations of $407,000 (or a loss of $0.06 per fully diluted share) for the second fiscal quarter ended December 31, 2023. During the quarter ended December 31, 2024, the Company recorded an impairment loss of $100,000 to write down the value of the net assets of its information technology business which sold in January 2025.

Net loss for the quarter ended December 31, 2024 was $1,343,000 (or a loss of $0.19 per fully diluted share) compared to a net loss of $3,075,000 (or a loss of $0.44 per fully diluted share) for the quarter ended December 31, 2023. The net loss for the second fiscal quarter of 2025 included a loss from discontinued operations of $273,000 (or a loss of $0.04 fully diluted share), which includes a loss of $110 on the sale of real estate in Houston, Mississippi. The net loss for the second fiscal quarter of 2024 included a loss from discontinued operations of $2,668,000 (or a loss of $0.38 per fully diluted share), which includes for the quarter an impairment loss of $2,032,000 on the sale of the Trace Regional Hospital, a vacant medical office building and three (3) patient clinics and a loss from operations of $636,000, primarily from operations of Trace Regional Hospital (prior to its sale) and a nursing home in Houston, Mississippi.

Consolidated net revenues for the fiscal quarters ended December 31, 2024 and 2023 were $7,935,000 and $8,510,000, respectively, which consisted primarily of pharmacy net revenues. Pharmacy net revenues for the quarter ended December 31, 2024 decreased $575,000, or 7%, from the same period last year. The pharmacy business had lower retail pharmacy scripts and durable medical equipment orders filled this year.

SunLink reported an operating loss for the quarter ended December 31, 2024 of $1,012,000 compared to an operating loss for the quarter ended December 31, 2023 of $433,000.

SunLink reported a loss from continuing operations of $1,512,000 (or a loss of $0.21 per fully diluted share) for its six months ended December 31, 2024 compared to a loss from continuing operations of $835,000 (or $0.12 per fully diluted share) for the six months ended December 31, 2023. Net loss for the six months ended December 31, 2024 was $1,892,000 (or a loss of $0.27 per fully diluted share) compared to a net loss of $4,419,000 (or $0.63 per fully diluted share) for the six months ended December 31, 2023. The net loss for the six months ended December 31, 2024 included a loss from discontinued operations of $380,000 (or a loss of $0.05 per fully diluted share), compared to a loss from discontinued operations of $3,584,000 (or a loss of $0.51 per fully diluted share) for the six months ended December 31, 2023. The discontinued operations loss for the six months ended December 31, 2024 includes a loss of $110,000 on the October 2024 property sale in Houston, Mississippi. The discontinued operations loss for the six months ended December 31, 2023 included an impairment loss of $2,032,000 on the sale of the Trace Regional Hospital, a vacant medical office building and three (3) patient clinics and loss from operations of $1,552,000, primarily from Trace Regional Hospital (prior to its sale) and a nursing home in Houston, Mississippi. Consolidated net revenues for each of the six months ended December 31, 2024 and 2023 were $15,858,000 and $17,065,000, respectively. Pharmacy net revenues for the six months ended December 31, 2023 included $380,000 from the reversal of reserves for certain sales taxes previously accrued. Excluding the effect of the reversal of sales tax accruals, net revenues decreased 5% in the six months ended December 31, 2024 compared to the prior year due primarily to decreased volume of Retail pharmacy scripts filled.

SunLink reported an operating loss for the six months ended December 31, 2024 of $2,206,000 compared to an operating loss for the six months ended December 31, 2023 of $883,000. The operating loss during the comparable six month period last year resulted primarily from the lower net revenues partially offset by the reversal of $380,000 in accrued sales tax reserves.

Merger

On January 6, 2025, the Company and Regional Health Properties, Inc. (“Regional”) jointly announced that they have entered into a definitive agreement and plan of merger (the “merger agreement”), dated January 3, 2025 pursuant to which the Company will merge with and into Regional (the “merger”) in exchange for the issuance of an aggregate of 1,410,000 shares of Regional common stock and 1,410,000 shares of Regional’s newly-authorized Series D 8% Cumulative Convertible Redeemable Preferred Stock with a liquidation preference of $10 per share. The merger has been approved unanimously by each company’s board of directors and completion of the transaction is subject to the receipt of the approvals of the shareholders of both Regional and the Company, regulatory approvals, and satisfaction of customary closing conditions.

COVID-19 Pandemic

The Company continues to experience post-COVID-19 pandemic after-effects in its quarter and believes it will likely to continue experience these effects on its assets and operations in the foreseeable future particularly from salaries and wages pressure, workforce shortages, supply chain disruption and broad inflationary pressures. Our ability to make estimates of any such continuing effects on future revenues, expenses or changes in accounting judgments that have had or are reasonably likely to have a material effect on our financial statements is very limited, depending as they do on the severity and length thereof; as well as any further government actions and/or regulatory changes intended to address such effects.

SunLink Health Systems, Inc. is the parent company of subsidiaries that own and operate a pharmacy business and an information technology business in the Southeast (the latter of which sold on January 6, 2025). 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, 2024 and other filings with the Securities and Exchange Commission which can be located at www.sec.gov.

SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES
FISCAL 2025 SECOND QUARTER RESULTS
Amounts in 000's, except per share

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
	Three Months Ended December 31,												Six Months Ended December 31,
		2024						2023					2024					2023
					% of Net						% of Net					% of Net					% of Net
		Amount			Revenues			Amount			Revenues		Amount			Revenues		Amount			Revenues
Net revenues		$	7,935			100.0	%	$	8,510		100.0	%	$	15,858		100.0	%	$	17,065		100.0	%
Costs and Expenses:
Cost of goods sold			4,618			58.2	%		4,761		55.9	%		9,093		57.3	%		9,532		55.9	%
Salaries, wages and benefits			2,713			34.2	%		2,668		31.4	%		5,791		36.5	%		5,285		31.0	%
Supplies			40			0.5	%		39		0.5	%		74		0.5	%		73		0.4	%
Purchased services			326			4.1	%		281		3.3	%		645		4.1	%		567		3.3	%
Other operating expenses			833			10.5	%		784		9.2	%		1,637		10.3	%		1,690		9.9	%
Rent and leases			93			1.2	%		92		1.1	%		187		1.2	%		183		1.1	%
Depreciation and amortization			324			4.1	%		318		3.7	%		637		4.0	%		618		3.6	%
Operating loss			(1,012	)		-12.8	%		(433	)	-5.1	%		(2,206	)	-13.9	%		(883	)	-5.2	%

Interest Income - net			42			0.5	%		29		0.3	%		100		0.6	%		51		0.3	%
Impairment loss			(100	)		-1.3	%		0		0.0	%		(100	)	-0.6	%		0		0.0	%
Gain on sale of assets			0			0.0	%		0		0.0	%		694		4.4	%		2		0.0	%

Loss from Continuing Operations before
Income Taxes			(1,070	)		-13.5	%		(404	)	-4.7	%		(1,512	)	-9.5	%		(830	)	-4.9	%
Income Tax expense			0			0.0	%		3		0.0	%		0		0.0	%		5		0.0	%
Loss from Continuing Operations			(1,070	)		-13.5	%		(407	)	-4.8	%		(1,512	)	-9.5	%		(835	)	-4.9	%
Loss from Discontinued Operations, net of tax			(273	)		-3.4	%		(2,668	)	-31.4	%		(380	)	-2.4	%		(3,584	)	-21.0	%
Net Loss		$	(1,343	)		-16.9	%	$	(3,075	)	-36.1	%	$	(1,892	)	-11.9	%	$	(4,419	)	-25.9	%
Loss Per Share from Continuing Operations:
Basic		$	(0.15	)				$	(0.06	)			$	(0.21	)			$	(0.12	)
Diluted		$	(0.15	)				$	(0.06	)			$	(0.21	)			$	(0.12	)
Loss Per Share from Discontinued Operations:
Basic		$	(0.04	)				$	(0.38	)			$	(0.05	)			$	(0.51	)
Diluted		$	(0.04	)				$	(0.38	)			$	(0.05	)			$	(0.51	)
Net Loss Per Share:
Basic		$	(0.19	)				$	(0.44	)			$	(0.27	)			$	(0.63	)
Diluted		$	(0.19	)				$	(0.44	)			$	(0.27	)			$	(0.63	)
Weighted Average Common Shares Outstanding:
Basic			7,041						7,040					7,041					7,039
Diluted			7,041						7,040					7,041					7,039


SUMMARY BALANCE SHEETS		December 31,			June 30,
			2024			2024
ASSETS
Cash and Cash Equivalents		$	8,020		$	7,170
Receivable - net			2,831			3,371
Current Assets Held for Sale			256			1,959
Other Current Assets			3,099			3,164
Property Plant and Equipment, net			2,053			2,809
Long-term Assets			1,613			2,139
		$	17,872		$	20,612
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities		$	3,495		$	4,213
Noncurrent Liabilities			296			426
Shareholders' Equity			14,081			15,973
		$	17,872		$	20,612

View source version on businesswire.com: https://www.businesswire.com/news/home/20250212287098/en/

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(770) 933-7004

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SunLink Health Systems, Inc. Announces Fiscal 2025 Second Quarter Results

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