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Regional Health Properties Reports Second Quarter 2023 Financial Results

Regional Health Properties, Inc.
Regional Health Properties, Inc.

Closed exchange offer

Recorded a $43.4 million gain on extinguishment of preferred stock

ATLANTA, GA, Aug. 23, 2023 (GLOBE NEWSWIRE) -- Regional Health Properties, Inc. (the “Company,” “Regional Health,” “we”, “us” or “our”) (NYSE American: RHE) (NYSE American: RHE-PA), a self-managed healthcare real estate investment company that invests primarily in real estate purposed for senior living and long-term care, today announced its financial results for the second quarter ended June 30, 2023.

SECOND QUARTER 2023 FINANCIAL AND BUSINESS HIGHLIGHTS

  • Eliminated $50.4 million in accumulated and unpaid dividends on the Series A Redeemable Preferred Stock, no par value (the “Series A Preferred Stock”)

  • Reduced the liquidation preference of the Series A Preferred Stock to $5.00 per share

  • Reduced net loss from $1.3 million in the prior year quarter to $0.7 million in the current quarter; including the $43.4 million gain on the extinguishment of the Series A Preferred Stock, net profit attributable to Regional Health common shareholders was $42.7 million for the quarter

  • Generated $0.9 million of Adjusted EBITDA1 in the quarter, compared to $0.6 million in the second quarter of 2022 and $0.3 million in the first quarter of 2023

  • Collected 88% of contractual rent as of June 30, 2023

ANNUNCIO PUBBLICITARIO

MANAGEMENT COMMENTS

Brent Morrison, Regional Health’s President and Chief Executive Officer, commented, “We are beyond excited to have completed a tremendously transformative transaction for the Company. The exchange offer was a very complex and complicated transaction, but we believe it was much needed for the Company to begin to grow again. I personally want to thank our long-term shareholders for their extreme patience and, most importantly, the employees at the Company and in the facilities. We are ecstatic to enter a new chapter for the Company and intend to continue to make progress towards success for all stakeholders.”

Mr. Morrison continued, “Management will continue to monitor the Company’s business activity and associated cashflows while looking for ways to further simplify its capital structure. The Company was also pleased by the notice from the NYSE American that the Company’s plan to regain compliance with the NYSE American’s continued listing standards had been accepted, as previously disclosed, and also for the Company’s newly issued 12.5% Series B Cumulative Redeemable Preferred Shares having commenced trading on the OTCQB Venture Market under the symbol ‘RHEPB’.”

FINANCIAL RESULTS FOR QUARTER ENDED JUNE 30, 2023

For the second quarter 2023, the Company reported total revenue of $4.6 million, a net loss of $0.7 million, EBITDA2 of $0.9 million and Adjusted EBITDA of $0.9 million.

BALANCE SHEET AND LIQUIDITY

As of June 30, 2023, the Company had $52 million of outstanding indebtedness with a weighted-average annual interest rate of 5.0% and a weighted-average maturity of approximately 19 years.

About Regional Health Properties

Regional Health Properties, Inc., a Georgia corporation, is a self-managed healthcare real estate investment company that invests primarily in real estate purposed for senior living and long-term care. For more information, visit www.regionalhealthproperties.com.

Important Cautions Regarding Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as “expects,” “intends,” “believes,” “anticipates,” “plans,” “likely,” “will,” “seeks,” “estimates” and variations of such words and similar expressions are intended to identify such forward-looking statements. This press release includes forward-looking statements that reflect the Company’s current views with respect to, among other things, its business, operations, financial performance, revenue, capital structure, the impact of the exchange offer and economic developments.

Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those projected or contemplated by our forward-looking statements due to various factors, including, among others: our dependence on the operating success of our operators; the amount of, and our ability to service, our indebtedness; covenants in our debt agreements that may restrict our ability to make investments, incur additional indebtedness and refinance indebtedness on favorable terms; the availability and cost of capital; our ability to raise capital through equity and debt financings or through the sale of assets; increases in market interest rates and inflation; our ability to meet the continued listing requirements of the NYSE American LLC and to maintain the listing of our securities thereon; the effect of increasing healthcare regulation and enforcement on our operators and the dependence of our operators on reimbursement from governmental and other third-party payors; the relatively illiquid nature of real estate investments; the impact of litigation and rising insurance costs on the business of our operators; the impact on us of litigation relating to our prior operation of our healthcare properties; the effect of our operators declaring bankruptcy, becoming insolvent or failing to pay rent as due; the ability of any of our operators in bankruptcy to reject unexpired lease obligations and to impede our ability to collect unpaid rent or interest during the pendency of a bankruptcy proceeding and retain security deposits for the debtor’s obligations; our ability to find replacement operators and the impact of unforeseen costs in acquiring new properties; epidemics or pandemics, including the COVID-19 pandemic, and the related impact on our tenants, operators and healthcare facilities; and other factors discussed from time to time in our news releases, public statements and documents filed by us with the Securities and Exchange Commission from time to time, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this press release, and we expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by applicable law.

Company Contact

Brent Morrison, CFA

Chief Executive Officer & President

Regional Health Properties, Inc.

Tel (678) 368-4402

Brent.morrison@regionalhealthproperties.com


REGIONAL HEALTH PROPERTIES, INC.

STATEMENT OF OPERATIONS

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Patient care revenues

 

$

2,526

 

 

$

4,570

 

 

$

4,442

 

 

$

6,881

 

Rental revenues

 

 

1,722

 

 

 

3,261

 

 

 

3,430

 

 

 

7,326

 

Management fees

 

 

247

 

 

 

255

 

 

 

525

 

 

 

519

 

Other revenues

 

 

103

 

 

 

7

 

 

 

107

 

 

 

14

 

Total revenues

 

 

4,598

 

 

 

8,093

 

 

 

8,504

 

 

 

14,740

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patient care expense

 

 

2,159

 

 

 

4,222

 

 

 

4,697

 

 

 

6,564

 

Facility rent expense

 

 

149

 

 

 

1,634

 

 

 

297

 

 

 

3,274

 

Cost of management fees

 

 

146

 

 

 

144

 

 

 

286

 

 

 

319

 

Depreciation and amortization

 

 

702

 

 

 

606

 

 

 

1,212

 

 

 

1,219

 

General and administrative expense

 

 

1,011

 

 

 

921

 

 

 

2,217

 

 

 

2,054

 

Doubtful accounts expense

 

 

24

 

 

 

466

 

 

 

40

 

 

 

2,227

 

Other operating expenses

 

 

221

 

 

 

629

 

 

 

313

 

 

 

968

 

Total expenses

 

 

4,412

 

 

 

8,622

 

 

 

9,062

 

 

 

16,625

 

Income/(Loss) from operations

 

 

186

 

 

 

(529

)

 

 

(558

)

 

 

(1,885

)

Other expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

679

 

 

 

639

 

 

 

1,359

 

 

 

1,291

 

Other expense, net

 

 

192

 

 

 

157

 

 

 

759

 

 

 

1,076

 

Total other expense, net

 

 

871

 

 

 

796

 

 

 

2,118

 

 

 

2,367

 

Net loss

 

$

(685

)

 

$

(1,325

)

 

$

(2,676

)

 

$

(4,252

)

Preferred stock dividends - undeclared

 

 

 

 

 

(2,249

)

 

 

 

 

 

(4,498

)

Preferred stock dividends - gain on extinguishment

 

 

43,395

 

 

 

 

 

 

43,395

 

 

 

 

Net profit (loss) attributable to Regional Health Properties, Inc. common stockholders

 

$

42,710

 

 

$

(3,574

)

 

$

40,719

 

 

$

(8,750

)

Net profit (loss) per share of common stock attributable to Regional Health Properties, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

$

22.68

 

 

$

(2.02

)

 

$

21.74

 

 

$

(4.93

)

Diluted:

 

$

22.68

 

 

$

(2.02

)

 

$

21.73

 

 

$

(4.93

)

Weighted average shares of common stock outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

1,883,028

 

 

 

1,768,720

 

 

 

1,872,636

 

 

 

1,775,637

 

Diluted:

 

 

1,883,253

 

 

 

1,768,720

 

 

 

1,873,489

 

 

 

1,775,637

 



REGIONAL HEALTH PROPERTIES, INC.

BALANCE SHEET

(in thousands)

 

 

 

 

 

 

 

 

 

 

June 30, 2023

 

 

 

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Property and equipment, net

 

$

46,266

 

 

$

46,611

 

Cash

 

 

1,926

 

 

 

843

 

Restricted cash

 

 

2,939

 

 

 

3,066

 

Accounts receivable, net of allowances of $1,400 and $1,298

 

 

3,023

 

 

 

6,289

 

Prepaid expenses and other

 

 

1,237

 

 

 

746

 

Notes receivable

 

 

772

 

 

 

1,099

 

Intangible assets - bed licenses

 

 

2,471

 

 

 

2,471

 

Intangible assets - lease rights, net

 

 

98

 

 

 

110

 

Right-of-use operating lease assets

 

 

2,677

 

 

 

2,848

 

Goodwill

 

 

1,585

 

 

 

1,585

 

Straight-line rent receivable

 

 

2,860

 

 

 

2,912

 

Total assets

 

$

65,854

 

 

$

68,580

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Senior debt, net

 

$

44,554

 

 

$

45,163

 

Bonds, net

 

 

5,988

 

 

 

6,120

 

Other debt, net

 

 

1,490

 

 

 

895

 

Accounts payable

 

 

3,036

 

 

 

3,293

 

Accrued expenses

 

 

4,832

 

 

 

5,036

 

Operating lease obligation

 

 

3,044

 

 

 

3,226

 

Other liabilities

 

 

1,635

 

 

 

1,131

 

Total liabilities

 

 

64,579

 

 

 

64,864

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Common stock and additional paid-in capital

 

 

62,938

 

 

 

62,702

 

Preferred stock, Series A

 

 

426

 

 

 

62,423

 

Preferred stock, Series B

 

 

18,602

 

 

 

 

Accumulated deficit

 

 

(80,691

)

 

 

(121,409

)

Total stockholders' equity

 

 

1,275

 

 

 

3,716

 

Total liabilities and stockholders' equity

 

$

65,854

 

 

$

68,580

 


REGIONAL HEALTH PROPERTIES, INC

CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands)

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(2,676

)

 

$

(4,252

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,212

 

 

 

1,219

 

Stock-based compensation expense

 

 

236

 

 

 

115

 

Rent expense (less than) in excess of cash paid

 

 

(11

)

 

 

153

 

Rent revenue less than (in excess) of cash received

 

 

(236

)

 

 

(73

)

Amortization of deferred financing costs, debt discounts and premiums

 

 

37

 

 

 

44

 

Bad debt expense

 

 

40

 

 

 

2,227

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

3,512

 

 

 

(3,446

)

Prepaid expenses and other assets

 

 

797

 

 

 

358

 

Accounts payable and accrued expenses

 

 

(460

)

 

 

1,138

 

Other liabilities

 

 

504

 

 

 

(281

)

Net cash provided by (used in) operating activities

 

 

2,955

 

 

 

(2,798

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(854

)

 

 

(152

)

Net cash used in investing activities

 

 

(854

)

 

 

(152

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payment of senior debt

 

 

(624

)

 

 

(806

)

Payment of other debt

 

 

(504

)

 

 

(572

)

Debt extinguishment and issuance costs

 

 

(17

)

 

 

 

Proceeds from other debt

 

 

 

 

 

50

 

Repurchase of common stock

 

 

 

 

 

(46

)

Net cash used in financing activities

 

 

(1,145

)

 

 

(1,374

)

Net change in cash and restricted cash

 

 

956

 

 

 

(4,324

)

Cash and restricted cash, beginning

 

 

3,909

 

 

 

9,848

 

Cash and restricted cash, ending

 

$

4,865

 

 

$

5,524

 


REGIONAL HEALTH PROPERTIES, INC.

DEBT SUMMARY

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2023

 

 

 

Maturity

 

 

Interest Rate

 

 

Principal

 

 

% of Principal

 

 

Deferred financing costs

 

 

Unamortized discount on bonds

 

 

Net Carrying Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Fixed Rate Debt

 

 

2041

 

 

 

4.27

%

 

 

45,166

 

 

 

85.0

%

 

 

(780

)

 

 

(116

)

 

 

44,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Floating Rate Debt

 

 

2036

 

 

 

9.17

%

 

 

7,970

 

 

 

15.0

%

 

 

(208

)

 

 

-

 

 

 

7,762

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

$

53,136

 

 

 

100.0

%

 

$

(988

)

 

$

(116

)

 

$

52,032

 


Calculation of Non-GAAP Financial Measures

This press release presents information about EBITDA and adjusted EBITDA, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding certain items that may not be indicative of its recurring core business operating results. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to the Company’s historical performance. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making.

These non-GAAP financial measures are presented for supplemental informational purposes only. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, GAAP financial measures. These non-GAAP financial measures may differ from the non-GAAP financial measures used by other companies. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measure is provided below for each of the fiscal periods indicated.

A reconciliation of EBITDA and adjusted EBITDA is as follows:

REGIONAL HEALTH PROPERTIES, INC.

RECONCILIATION OF NET(LOSS) INCOME TO NON-GAAP FINANCIAL MEASURES

(in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(685

)

 

$

(1,325

)

 

$

(2,677

)

 

$

(4,252

)

Depreciation and amortization

 

 

702

 

 

 

606

 

 

 

1,212

 

 

 

1,219

 

Interest expense, net

 

 

679

 

 

 

639

 

 

 

1,359

 

 

 

1,291

 

Amortization of Employee Stock Compensation

 

 

155

 

 

 

5

 

 

 

235

 

 

 

116

 

EBITDA

 

 

851

 

 

 

(76

)

 

 

129

 

 

 

(1,626

)

Bad Debt

 

 

24

 

 

 

466

 

 

 

40

 

 

 

1,310

 

Discontinued operations

 

 

(31

)

 

 

0

 

 

 

(31

)

 

 

0

 

Expenses related to preferred stock recapitalization

 

 

312

 

 

 

149

 

 

 

673

 

 

 

764

 

Other One-time Costs

 

 

1

 

 

 

63

 

 

 

264

 

 

 

92

 

Project Costs

 

 

89

 

 

 

0

 

 

 

168

 

 

 

0

 

One-time Income Adjustment - Quality Incentive Program

 

 

(301

)

 

 

0

 

 

 

0

 

 

 

0

 

Adjusted EBITDA from operations

 

$

946

 

 

$

602

 

 

$

1,243

 

 

$

540

 



1 Adjusted EBITDA is a non-GAAP financial measure. See “Calculation of Non-GAAP Financial Measures” for important additional information.
2 EBITDA is a non-GAAP financial measure. See “Calculation of Non-GAAP Financial Measures” for important additional information.