SunLink Health Systems, Inc. (NYSE MKT: SSY) today announced
earnings from continuing operations of $2,949,000 or $0.31 per
fully diluted share for its second fiscal quarter ended December
31, 2016 compared to a net loss of $8,566,000, or a loss of $0.91
per fully diluted share, for the quarter ended December 31, 2015.
The earnings from continuing operations in the current fiscal
year’s quarter are primarily due to the $2,819,000 gain on the
previously announced sale of a medical office building complex in
December 2016. The loss from continuing operations for the fiscal
quarter ended December 31, 2015 included a non-cash charge of
$7,101,000 to fully reserve the company’s deferred income tax
assets. Net earnings for the quarter ended December 31, 2016 were
$3,098,000 or $0.33 per fully diluted share compared to a net loss
of $9,346,000 or a loss of $0.99 per fully diluted share, for the
quarter ended December 31, 2015.
Consolidated net revenues from continuing operations for the
quarters ended December 31, 2016 and 2015 were $14,255,000 and
$16,584,000, respectively, a decrease of 14% in the current fiscal
year’s second quarter compared to the comparable quarter of the
prior fiscal year. Healthcare Facilities Segment net revenues in
the quarter ended December 31, 2016 of $5,606,000 decreased
$2,203,000 in the current fiscal year’s quarter primarily as a
result of the closure of one hospital in June 2016. The Specialty
Pharmacy Segment revenues of $8,407,000 in the quarter ended
December 31, 2016 decreased $161,000, or 1.9%, over the comparable
quarter of the prior fiscal year due primarily to lower durable
medical equipment and retail pharmacy revenues, partially offset by
increased institutional pharmacy revenues.
The company had an operating profit from continuing operations
for the quarter ended December 31, 2016 of $28,000, compared to an
operating loss from continuing operations for the quarter ended
December 31, 2015 of $1,262,000. The operating profit in the
quarter ended December 31, 2016 was due primarily to the closure of
an unprofitable hospital in the prior fiscal year and $347,000 of
favorable prior year Medicare cost report adjustments in the
current quarter.
Earnings from discontinued operations were $149,000 ($0.02 per
fully diluted share) for the quarter ended December 31, 2016
compared to a loss from discontinued operations of $780,000 (a loss
of $0.08 per fully diluted share) for the quarter ended December
31, 2015, respectively. The earnings from discontinued operations
for the current year result from positive settlements of prior
year’s Medicare cost report settlements at a previously sold
hospital.
For the six months ended December 31, 2016, SunLink reported
earnings from continuing operations of $1,699,000 or $0.18 per
fully diluted share, compared to a loss of $9,699,000 or a loss of
$1.03 per fully diluted share, for the comparable period of the
prior fiscal year. For the six months ended December 31, 2016,
SunLink reported net earnings of $6,121,000, or $0.65 per fully
diluted share compared to a net loss of $11,014,000, or a loss of
$1.17 per fully diluted share for the six months ended December 31,
2015. Earnings from discontinued operations were $4,422,000 ($0.47
per fully diluted share) for the six months ended December 31, 2016
compared to a loss from discontinued operations of $1,315,000 (a
loss of $0.14 per fully diluted share) for the six months ended
December 31, 2015. The earnings from discontinued operations for
the first six months of the current fiscal year result from a
pre-tax gain of $7,270,000 on the August 2016 sale of a
subsidiary’s Chestatee Regional Hospital in Dahlonega, GA.
Consolidated net revenues from continuing operations for the six
months ended December 31, 2016 and 2015 were $27,301,000 and
$33,168,000, respectively, a decrease of 18% in the current fiscal
year’s second quarter. Healthcare Facilities Segment net revenues
in the six months ended December 31, 2016 of $11,060,000 decreased
$5,544,000 in the current fiscal year’s quarter primarily from the
closure of one hospital in June 2016. The Specialty Pharmacy
Segment revenues of $15,748,000 in the six months ended December
31, 2016 decreased $387,000, or 2.4%, over the comparable quarter
of the prior fiscal year due primarily to lower durable medical
equipment and retail pharmacy revenues.
The company had an operating loss from continuing operations for
the six months ended December 31, 2016 of $925,000, compared to an
operating loss from continuing operations for the six months ended
December 31, 2015 of $2,428,000.
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 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,
2016 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 six months ended December 31, 2016 and 2015,
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.
Six Months Ended December 31,
2016 2015 Healthcare Facilties
Adjusted EBITDA $ 902,000 $ (1,137,000 ) Specialty Pharmacy
Adjusted EBITDA 334,000 636,000 Corporate overhead costs (1,251,000
) (1,048,000 ) Taxes and interest expense (150,000 ) (7,278,000 )
Other non-cash expenses and net change in
operating assets and liabilities
(3,749,000 ) 7,906,000 Net cash used in
operations $ (3,914,000 ) $ (921,000 )
SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES
FISCAL 2017 SECOND QUARTER 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,
2016 2015 2016
2015 % of Net % of Net
% of Net % of Net Amount
Revenues Amount Revenues
Amount Revenues Amount
Revenues Operating revenues (net of contractual
allowances) $ 14,359 100.7 % $ 17,116 103.2 % $ 27,438 100.5 % $
34,416 103.8 % Less provision for bad debts of Healthcare
Facilities Segment 104 0.7 % 532
3.2 % 137 0.5 % 1,248 3.8 % Net
Revenues 14,255 100.0 % 16,584 100.0 % 27,301 100.0 % 33,168 100.0
% Costs and Expenses: Cost of goods sold 5,433 38.1 % 5,371 32.4 %
10,069 36.9 % 9,968 30.1 % Salaries, wages and benefits 5,759 40.4
% 7,926 47.8 % 11,604 42.5 % 16,243 49.0 % Provision for bad debts
of Specialty Pharmacy Segment 125 0.9 % 138 0.8 % 216 0.8 % 360 1.1
% Supplies 482 3.4 % 923 5.6 % 918 3.4 % 1,839 5.5 % Purchased
services 713 5.0 % 880 5.3 % 1,421 5.2 % 1,749 5.3 % Other
operating expenses 1,111 7.8 % 1,959 11.8 % 2,821 10.3 % 4,160 12.5
% Rents and leases 138 1.0 % 190 1.1 % 267 1.0 % 391 1.2 %
Electronic Health Records incentive payments - 0.0 % 7 0.0 % - 0.0
% 7 0.0 % Depreciation and amortization 466
3.3 % 452 2.7 % 910 3.3 % 879
2.7 % Operating Profit (Loss) 28 0.2 % (1,262 ) -7.6 % (925
) -3.4 % (2,428 ) -7.3 % Interest Expense - net (157 ) -1.1
% (209 ) -1.3 % (378 ) -1.4 % (426 ) -1.3 % Loss on extinguishment
of debt (289 ) -2.0 % - 0.0 % (243 ) -0.9 % Gain on sale of assets
2,995 21.0 % 6 0.0 %
3,017 11.1 % 7 0.0 %
Earnings (Loss) from Continuing Operations
before Income Taxes
2,577 18.1 % (1,465 ) -8.8 % 1,471 5.4 % (2,847 ) -8.6 % Income Tax
Expense (Benefit) (372 ) -2.6 % 7,101
42.8 % (228 ) -0.8 % 6,852 20.7 % Earnings
(Loss) from Continuing Operations 2,949 20.7 % (8,566 ) -51.7 %
1,699 6.2 % (9,699 ) -29.2 % Earnings (Loss) from Discontinued
Operations, net of tax 149 1.0 % (780 )
-4.7 % 4,422 16.2 % (1,315 ) -4.0 % Net
Earnings (Loss) $ 3,098 21.7 % $ (9,346 ) -56.4 % $
6,121 22.4 % $ (11,014 ) -33.2 % Eanings (Loss) Per Share
from Continuing Operations: Basic $ 0.31 $ (0.91 ) $ 0.18
$ (1.03 ) Diluted $ 0.31 $ (0.91 ) $ 0.18 $
(1.03 ) Earnings (Loss) Per Share from Discontinued Operations:
Basic $ 0.02 $ (0.08 ) $ 0.47 $ (0.14 ) Diluted $
0.02 $ (0.08 ) $ 0.47 $ (0.14 ) Net Earnings (Loss)
Per Share: Basic $ 0.33 $ (0.99 ) $ 0.65 $ (1.17 )
Diluted $ 0.33 $ (0.99 ) $ 0.65 $ (1.17 ) Weighted
Average Common Shares Outstanding: Basic 9,443
9,443 9,443 9,443 Diluted
9,450 9,443 9,449 9,443
HEALTHCARE FACILITIES VOLUME STATISTICS
Admissions 185 276 374 609 Nursing Home Patient Days 14,128 14,491
28,561 29,012
SUMMARY BALANCE SHEETS Dec.
31, June 30, 2016 2016 ASSETS Cash and
Cash Equivalents $ 14,379 $ 3,261 Accounts Receivable - net 6,647
6,166 Other Current Assets 4,834 8,465 Property Plant and
Equipment, net 10,832 12,994 Long-term Assets 3,951
13,219 $ 40,643 $ 44,105 LIABILITIES
AND SHAREHOLDERS' EQUITY Current Liabilities $ 7,173 $ 20,051
Long-term Debt and Other Noncurrent Liabilities 7,806 4,565
Shareholders' Equity 25,664 19,489 $
40,643 $ 44,105
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version on businesswire.com: http://www.businesswire.com/news/home/20170214006462/en/
SunLink Health Systems, Inc.Robert M. Thornton, Jr.,
770-933-7004Chief Executive Officer
Sunlink Health Systems (AMEX:SSY)
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