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SunLink Health Systems, Inc. Announces Fiscal 2014 Second Quarter Results
[February 14, 2014]

SunLink Health Systems, Inc. Announces Fiscal 2014 Second Quarter Results


ATLANTA --(Business Wire)--

SunLink Health Systems, Inc. (NYSE MKT: SSY) today announced a loss from continuing operations for its fiscal quarter ended December 31, 2013 of $13,000 or a loss of $0.00 per fully diluted share, compared to a loss from continuing operations of $1,395,000 or a loss of $0.15 per fully diluted share, for the quarter ended December 31, 2012. SunLink reported net earnings for the quarter ended December 31, 2013 of $227,000, or $0.02 per fully diluted share, compared to net earnings of $3,935,000, or $0.42 per fully diluted share, for the quarter ended December 31, 2012. The results for the three months ended December 31, 2012 included in earnings from discontinued operations an after tax gain of approximately $5,200,000 from the sale of substantially all of the assets of its Dexter Hospital, LLC subsidiary.

Consolidated net revenues from continuing operations for the quarters ended December 31, 2013 and 2012 were $27,064,000 and $27,850,000, respectively, a decrease of 2.8% in the current year's quarter. The Healthcare Facilities Segment net revenues in the current quarter of $17,647,000 decreased $957,000, or 5.1%, compared to $18,604,000 for the comparable quarter of the prior year due to lower patient volume. The Specialty Pharmacy Segment revenues of $9,326,000 in the quarter ended December 31, 2013 increased $87,000, or 0.9% above segment revenues of the comparable quarter of the prior year due primarily to increased institutional pharmacy revenues.

The company had an operating loss from continuing operations for the quarter ended December 31, 2013 of $188,000, compared to an operating loss from continuing operations for the quarter ended December 31, 2012 of $974,000. The operating loss decreased in the current year's quarter primarily due to increased Adjusted EBITDA (a non-GAAP measure of the liquidity of the company) for SunLink's Specialty Pharmacy and the increase of $274,000 in hospital electronic health records incentive payments. Adjusted EBITDA for SunLink's Specialty Pharmacy Segment was $419,000 in the second fiscal quarter compared to Adjusted EBITDA of $124,000 in the comparable quarter a year ago.

Earnings from discontinued operations were $240,000 ($0.03 per fully diluted share) for the quarter ended December 31, 2013 and $5,330,000 ($0.56 per fully diluted share) for the fiscal quarter ended December 31, 2012, respectively. Earnings from discontinued operations for the quarter ended December 31, 2012 included a post-tax gain on the sale of substantially all of the assets of a subsidiary which owned and operated a hospital in Dexter, Missouri.

For the six months ended December 31, 2013, SunLink reported a loss from continuing operations of $1,187,000, or a loss of $0.13 per fully diluted share, compared to a loss of $3,017,000, or a loss of $0.32 per fully diluted share, for the comparable period last year. For the six months ended December 31, 2013, SunLink reported a net loss of $931,000, or a loss of $0.10 per fully diluted share, compared to net income of $2,511,000 or $0.27 per share, for the six months ended December 31, 2012.

Consolidated net revenues from continuing operations for the six months ended December 31, 2013 decreased by 1.7% to $52,642,000 compared to $53,540,000 in the comparable period a year ago. The Healthcare Facilities Segment had net revenues in the six months ended December 31, 2013 of $36,287,000 compared to $37,512,000 for the comparable period a year ago. The Specialty Pharmacy Segment had $16,168,000 of net revenues for the six months ended December 31, 2013 compared to $15,989,000 for the comparable six months of the last fiscal year.

SunLink had an operating loss from continuing operations for the six months ended December 31, 2013 of $1,052,000 compared to an operating loss of $3,465,000 for the six months ended December 31, 2012. Adjusted EBITDA for SunLink's Healthcare Facilities Segment was $1, 987,000 in the six months ended December 31, 2013, compared to $1,134,000 for the comparable period last year. Adjusted EBITDA for the six months ended December 31, 2013 for the Specialty Pharmacy Segment was $489,000 compared to $204,000 for the comparable period last year.

SunLink Health Systems, Inc. is the parent company of subsidiaries that operate hospitals and related businesses in the Southeast and Midwest, and a specialty pharmacy company in Louisiana. Each hospital is the only hospital in its community and 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 six months ended December 31, 2013 and 2012, respectively, is shown below. Healthcare Facilities Adjusted EBITDA and Specialty 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   Six Months Ended
December 31, December 31,
2013   2012 2013   2012
 

Healthcare Facilities Adjusted EBITDA

$ 1,155,000 $ 1,005,000 $ 1,987,000 $ 1,134,000
Specialty Pharmacy Adjusted EBITDA 419,000 124,000 489,000 204,000
Corporate overhead costs (864,000 ) (1,114,000 ) (1,723,000 ) (2,041,000 )
Taxes and interest expense 46,000 (3,649,000 ) (270,000 ) (4,150,000 )
Other non-cash expenses and net change in
operating assets and liabilities   403,000     6,346,000     3,062,000     4,973,000  
Net cash provided by operations $ 1,159,000   $ 2,712,000   $ 3,545,000   $ 120,000  
 

SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES
FISCAL 2014 SECOND QUARTER AND ANNUAL
RESULTS
Amounts in 000's, except per share and volume amounts
                 
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended December 31, Six Months Ended December 31,
2013 2012 2013 2012
% of Net % of Net % of Net % of Net
Amount Revenues   Amount   Revenues   Amount Revenues   Amount Revenues
Operating revenues (net of contractual allowances) $ 29,963 110.7 % $ 30,385 109.1 % $ 58,259 110.7 % $ 59,557 111.2 %
Less provision for bad debts of Healthcare Facilities Segment   2,899     10.7 %   2,535   9.1 %   5,617   10.7 %   6,017   11.2 %
Net Revenues 27,064 100.0 % 27,850 100.0 % 52,642 100.0 % 53,540 100.0 %
Costs and Expenses:
Cost of goods sold 6,485 24.0 % 6,529 23.4 % 10,760 20.4 % 10,766 20.1 %
Salaries, wages and benefits 12,768 47.2 % 13,386 48.1 % 25,755 48.9 % 26,607 49.7 %
Provision for bad debts of Specialty Pharmacy Segment 42 0.2 % 177 0.6 % 95 0.2 % 257 0.5 %
Supplies 2,298 8.5 % 2,437 8.8 % 4,495 8.5 % 4,700 8.8 %
Purchased services 1,907 7.0 % 1,896 6.8 % 3,758 7.1 % 3,852 7.2 %
Other operating expenses 3,694 13.6 % 3,976 14.3 % 7,405 14.1 % 8,081 15.1 %
Rents and leases 458 1.7 % 458 1.6 % 919 1.7 % 1,004 1.9 %
Impairments of property, plant and equipment - 0.0 % - 0.0 % - 0.0 % 789 1.5 %
Depreciation and amortization 898 3.3 % 989 3.6 % 1,805 3.4 % 1,973 3.7 %
Electronic Health Records incentive programs   (1,298 )   -4.8 %   (1,024 ) -3.7 %   (1,298 ) -2.5 %   (1,024 ) -1.9 %
Operating Loss (188 ) -0.7 % (974 ) -3.5 % (1,052 ) -2.0 % (3,465 ) -57.6 %
 
Interest Expense - net   (307 )   -1.1 %   (647 ) -2.3 %   (619 ) -1.2 %   (1,206 ) -2.3 %
 
Loss from Continuing Operations before income taxes (495 ) -1.8 % (1,621 ) -5.8 % (1,671 ) -3.2 % (4,671 ) -8.7 %
Income Tax Benefit   (482 )   -1.8 %   (226 ) -0.8 %   (484 ) -0.9 %   (1,654 ) -3.1 %
Loss from Continuing Operations (13 ) 0.0 % (1,395 ) -5.0 % (1,187 ) -2.3 % (3,017 ) -5.6 %
Earnings from Discontinued Operations, net of tax   240     0.9 %   5,330   19.1 %   256   0.5 %   5,528   10.3 %
Net Earnings (Loss) $ 227     0.8 % $ 3,935   14.1 % $ (931 ) -1.8 % $ 2,511   4.7 %
 
Earnings Loss Per Share from Continuing Operations:
Basic $ (0.00 ) $ (0.15 ) $ (0.13 ) $ (0.32 )
Diluted $ (0.00 ) $ (0.15 ) $ (0.13 ) $ (0.32 )
 
Earnings Per Share from Discontinued Operations:
Basic $ 0.03   $ 0.56   $ 0.03   $ 0.59  
Diluted $ 0.03   $ 0.56   $ 0.03   $ 0.59  
Net Earnings (Loss) Per Share:
Basic $ 0.02   $ 0.42   $ (0.10 ) $ 0.27  
Diluted $ 0.02   $ 0.42   $ (0.10 ) $ 0.27  
Weighted Average Common Shares Outstanding:
Basic   9,447     9,446     9,446     9,446  
Diluted   9,447     9,446     9,446     9,446  
 
HEALTHCARE FACILITIES VOLUME STATISTICS
 
Admissions 775 806 1,522 1,685
Equivalent Admissions 2,380 2,431 4,947 5,989
Surgeries 462 404 962 922
Net revenue per equivalent admission $ 7,415 $ 6,574 $ 7,335 $ 6,263
 
SUMMARY BALANCE SHEETS
December 31,

June 30,

ASSETS 2013 2013
 
Cash and Cash Equivalents $ 4,561 $ 2,657
Accounts Receivable - net 10,839 12,356
Other Current Assets 14,502 13,080
Property Plant and Equipment, net 29,766 30,574
Long-term Assets   8,856     9,336  
$ 68,524   $ 68,003  
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $ 16,123 $ 22,246
Long-term Debt and Other Noncurrent Liabilities 19,558 12,014
Shareholders' Equity   32,843     33,743  
$ 68,524   $ 68,003  


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