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SunLink Health Systems, Inc. Announces Fiscal 2018 First Quarter Results
[November 14, 2017]

SunLink Health Systems, Inc. Announces Fiscal 2018 First Quarter Results


SunLink Health Systems, Inc. (NYSE American: SSY) today announced a loss from continuing operations of $224,000 or a loss of $0.02 per fully diluted share for its first fiscal quarter ended September 30, 2017 compared to a loss of $1,250,000, or a loss of $0.13 per fully diluted share, for the quarter ended September 30, 2016. Net loss for the quarter ended September 30, 2017 was a loss of $277,000 or a loss of $0.03 per fully diluted share compared to net earnings of $3,023,000 or $0.32 per fully diluted share, for the quarter ended September 30, 2016. Earnings from discontinued operations of $4,273 in last year's first fiscal quarter included a pre-tax gain on the sale of a hospital of $7,246.

Consolidated net revenues from continuing operations for the quarters ended September 30, 2017 and 2016 were $13,363,000 and $13,046,000, respectively, an increase of 2% in the current year's first fiscal quarter compared to the comparable quarter of the prior fiscal year. Healthcare Services Segment net revenues of $5,654,000 for the quarter ended September 30, 2017 decreased $51,000 (1%) for last year's first quarter primarily due to decreased nursing home revenues. Pharmacy Segment revenues of $7,709,000 in the quarter ended September 30, 2017 increased $368,000 (5%) for the comparable quarter of the prior fiscal year due to higher durable medical equipment revenues this year which were realized from increased Medicare reimbursement under the provisions of the 21st Century Cures Act.

SunLink had an Operating Loss for the quarter ended September 30, 2017 of $99,000, compared to an Operating Loss for the quarter ended September 30, 2016 of $953,000.

The loss from Discontinued Operations was $53,000 (a loss of $0.01 per fully diluted share) for the quarter ended September 30, 2017 compared to earnings from discontinued operations of $4,273,000 ($0.45 per fully diluted share) for the quarter ended September 30, 2016, which included a pre-tax gain on the sale of a hospital of $7,246.

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 dedicated physicians and 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 fiscal year ended September 30, 2017 and 2016, 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 Years Ended
September 30,
2017     2016
 
Healthcare Services Adjusted EBITDA $ 101,000 $ 57,000
Pharmacy Adjusted EBITDA 693,000 62,000
Corporate Overhead Adjusted EBITDA (464,000 ) (628,000 )
Taxes and interest expense (127,000 ) (365,000 )

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

  30,000     (2,316,000 )
Net cash used in operations $ 233,000   $ (3,190,000 )

 
 
 
 
 
 
SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES
FISCAL 2018 FIRST QUARTER AND ANNUAL
RESULTS
Amounts in 000's, except per share and volume amounts
 
CONSOLIDATED STATEMENTS OF EARNINGS
     

Three Months Ended September 30,

2017     2016
    % of Net     % of Net
Amount Revenues Amount Revenues
Operating revenues (net of contractual allowances) $ 13,433 100.5 % $ 13,079 100.3 %
Less provision for bad debts of Healthcare Facilities Segment   70     0.5 %   33   0.3 %
Net Revenues 13,363 100.0 % 13,046 100.0 %
Costs and Expenses:
Cost of goods sold 4,458 33.4 % 4,636 35.5 %
Salaries, wages and benefits 5,764 43.1 % 5,845 44.8 %
Provision for bad debts of Specialty Pharmacy Segment 120 0.9 % 91 0.7 %
Supplies 425 3.2 % 436 3.3 %
Purchased services 687 5.1 % 708 5.4 %
Other operating expenses 1,442 10.8 % 1,710 13.1 %
Rents and leases 154 1.2 % 129 1.0 %
Depreciation and amortization 429 3.2 % 444 3.4 %
Electronic Health Records incentive programs   (17 )   -0.1 %   -   0.0 %

Operating Profit (Loss)

(99 ) -0.7 % (953 ) -7.3 %
 
Interest Expense - net (127 ) -1.0 % (221 ) -1.7 %
Gain on extinguishment of debt - net - 0.0 % 46 0.4 %
Gain on sale of assets   2     0.0 %   22   0.2 %
 
Earnings (Loss) from Continuing Operations before
Income Taxes (224 ) -1.7 % (1,106 ) -8.5 %
Income Tax Expense (Benefit)   -     0.0 %   144   1.1 %
Earnings (Loss) from Continuing Operations (224 ) -1.7 % (1,250 ) -9.6 %
Earnings (Loss) from Discontinued Operations, net of tax   (53 )   -0.4 %   4,273   32.8 %
Net Earnings (Loss) $ (277 )   -2.1 % $ 3,023   23.2 %
Earnings (Loss) Per Share from Continuing Operations:
Basic $ (0.02 ) $ (0.13 )
Diluted $ (0.02 ) $ (0.13 )
Earnings (Loss) Per Share from Discontinued Operations:
Basic $ (0.01 ) $ 0.45  
Diluted $ (0.01 ) $ 0.45  
Net Earnings (Loss) Per Share:
Basic $ (0.03 ) $ 0.32  
Diluted $ (0.03 ) $ 0.32  
Weighted Average Common Shares Outstanding:
Basic   9,163     9,443  
Diluted   9,163     9,443  
 
 
HEALTHCARE FACILITIES VOLUME STATISTICS
 
Hospital and Nursing Home Admissions 166 121
Hospital and Nursing Home Patient Days 14,745 15,434
 
 
SUMMARY BALANCE SHEETS September 30, June 30,
2017 2017
ASSETS
Cash and Cash Equivalents $ 9,909 $ 10,494
Accounts Receivable - net 5,989 5,906
Other Current Assets 6,618 6,221
Property Plant and Equipment, net 10,571 10,290
Long-term Assets   2,315     2,425  
$ 35,402   $ 35,336  
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $ 12,658 $ 12,314
Long-term Debt and Other Noncurrent Liabilities 1,322 1,329
Shareholders' Equity   21,422     21,693  
$ 35,402   $ 35,336  
 
 
 
 


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