ATLANTA, May 16, 2019 /PRNewswire/ -- Regional Health
Properties, Inc. (NYSE American: RHE) (NYSE American: RHEpA), a
self-managed healthcare real estate investment company that invests
primarily in real estate purposed for senior living and long-term
care, today filed its Annual Report on Form 10-K with the
Securities and Exchange Commission for the year ended December 31, 2018. The audited financial
statements for the year ended December 31,
2018 included in the Annual Report on Form 10-K contained an
audit opinion from its independent registered public accounting
firm, which included a going concern emphasis of matter
paragraph.
This announcement is made pursuant to NYSE American Company
Guide Section 610(b), which requires separate public announcement
of the receipt of an audit opinion containing a going concern
paragraph. This announcement does not represent any change or
amendment to the Company's audited consolidated financial
statements for the year ended December 31,
2018 or to its Annual Report on Form 10-K for the year ended
December 31, 2018.
2018 Business Update
- Executed a Purchase and Sale Agreement to Sell One Facility
Located in Georgia, One Facility
Located in Alabama, and Two
Facilities Located in Oklahoma for
a Total of $28.5 Million
- Transferred Operations at Five Facilities Located in
Ohio to New Operating Partner,
Aspire Regional Partners
- Transferred Operations at One Facility Located in North Carolina to New Operating Partner, Vero
Health Care
- Terminated Lease on Two Facilities Located in Georgia for a Termination Fee of $1.2 million
"The Company continues to streamline its processes and
procedures along with making significant progress in improving its
operator portfolio performance and asset management functions,"
stated Brent Morrison, Regional's
Chief Executive Officer. "We recently added a new operator to our
portfolio in Ohio as well as
adding another new operator to our portfolio in North Carolina and have already observed quick
turnarounds in those regions and expect further improvements to
come. We also terminated a lease on two facilities in Georgia and collected a $1.2 million termination fee as well as executed
a separate purchase and sale agreement to sell four facilities
located in Georgia, Alabama, and Oklahoma. Successful completion of these
transactions as well as continued efforts to improve our operator
portfolio performance is expected to significantly improve the
Company's overall financial position going forward."
The consummation of the sale of the four facilities located in
Georgia, Alabama, and Oklahoma is subject to satisfactory due
diligence by the purchaser and customary termination rights and
closing conditions.
Management periodically monitors a number of facility
performance metrics, including rent coverages both before and after
management fees. In the fourth quarter of 2018, the Company's
portfolio rent coverage before management fees was 1.45x (as
compared with 1.25x in the fourth quarter of 2017) and rent
coverage after management fees was 1.25x (as compared with 0.85x in
the fourth quarter of 2017). Occupancy and skilled mix for the
Company's portfolio were 83.0% and 29.6% for the fourth quarter of
2018, respectively, compared to 85.8% and 25.8% for the fourth
quarter of 2017, respectively. These data remove the impact of five
facilities located in Ohio where
operations were recently transitioned to Aspire Regional Partners,
one facility located in North
Carolina where operations were recently transitioned to Vero
Health Care, and three facilities located in Georgia where operations were recently
transitioned to Peach Healthcare.
Summary of Financial Results for the Three and 12 Months
Ended December 31, 2018
Total revenues in the fourth quarter of 2018 decreased 13.7% to
$5.5 million, from $6.4 million in the fourth quarter of 2017. Total
revenues for the 12 months ended December
31, 2018, decreased by 12.3% to $22.0
million from $25.1 million for
the 12 months ended December 31,
2017. The decrease is a result of the effects of the
operator changes in Ohio and
North Carolina. The Company
generally recognizes all rental revenues on a straight-line rent
accrual basis.
General and administrative costs increased 11.2%, to
$941,000 for the three months ended
December 31, 2018, compared with
$846,000 for the same period in 2017.
General and administrative costs for the 12 months ended
December 31, 2018 decreased by 4.2%,
to $3.7 million, compared with
$3.9 million for the same period in
2017. For the 12 months ended December 31,
2018 and 2017, general and administrative costs include
$0.2 million and $0.3 million, respectively, of stock-based
compensation expense.
Interest expense increased by $288,000, or 27.5%, to $1.3 million for the fourth quarter of 2018
compared with $1.0 million for the
same period in 2017. Interest expense for the 12 months ended
December 31, 2018, increased by
$1.8 million, or 44.8%, to
$5.9 million compared to $4.1 million for the same period in 2017. The
increase is mainly due to one-time charges to deferred financing
costs associated with loan refinancing during the year as well as
additional ongoing interest expense incurred, offset by a one-time
deferred financing cost gain for refunds received in the fourth
quarter 2018.
Income from discontinued operations, net of tax, for the fourth
quarter of 2018 was $316,000 compared
to income from discontinued operations, net of tax, of $370,000 for the prior year period. For the full
year 2018, income from discontinued operations, net of tax, was
$74,000 compared to a loss from
discontinued operations of $1.7
million for the prior year period. The reduction of loss
from discontinued operations from 2017 to 2018 was primarily due to
a reduction to the Company's accrual on professional and general
liability claims as well as various other bad debt items pertaining
to legacy patient care operations.
Net loss attributable to Regional Health Properties, Inc.'s
common stockholders in the fourth quarter of 2018 was $3.9 million, or $2.31 per basic and diluted share, compared
with a net loss of $1.2 million, or
$0.73 per basic and diluted share,
for the fourth quarter of 2017. For the 12 months ended
December 31, 2018, the net loss
attributable to Regional Health Properties, Inc.'s common
stockholders was $19.9 million, or
$11.86 per basic and diluted share,
compared with a net loss of $8.6
million, or $5.20 per basic
and diluted share, in the prior year period.
Cash at December 31, 2018, totaled
$2.4 million compared with
$1.8 million at December 31, 2017. Restricted cash at
December 31, 2018, totaled
$4.1 million compared to $3.5 million at December
31, 2017. Total debt outstanding at December 31, 2018 totaled $81.3 million compared with $73.1 million at December
31, 2017 (net of $1.5 million
and $2.0 million of deferred
financing costs at December 31, 2018
and December 31, 2017,
respectively). The increase in debt during the year was due to
additional financing.
About Regional Health Properties
Regional Health Properties, Inc. (NYSE American: RHE) (NYSE
American: RHEpA) is the successor to AdCare Health Systems,
Inc., and is a self-managed healthcare real estate investment
company that invests primarily in real estate purposed for senior
living and long-term healthcare through facility lease and
sub-lease transactions.
Regional currently owns, leases or manages for third parties 28
facilities (16 of which are owned by Regional, nine of which are
leased by Regional and three of which are managed by Regional for
third parties). Of the 16 facilities owned by Regional, four
are held for sale subject to the purchase and sale agreement
discussed above and previously disclosed by Regional in its Current
Report on Form 8-K filed with the Securities and Exchange
Commission on April 18, 2019.
Assuming the consummation of the sale of the four facilities
contemplated by such purchase and sale agreement, 24 facilities
would be owned, leased or managed for third parties by
Regional.
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. Statements in this press
release regarding future events and developments and our future
performance, as well as management's expectations, beliefs, plans,
estimates or projections relating to the future, are
forward-looking statements. Forward-looking statements in this
press release include, among others, statements regarding our
ability to consummate the sale of the four facilities pursuant to
the terms contemplated by the purchase and sale agreement, to
improve our operator portfolio performance and asset management
functions, and to otherwise improve our liquidity and overall
financial position going forward.
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 significant 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; 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; 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.
REGIONAL HEALTH
PROPERTIES, INC. AND SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
(Amounts in
000's)
|
|
|
December
31,
|
ASSETS
|
2018
|
2017
|
(Amounts in
000's)
|
|
|
Current
assets:
|
|
|
Cash
|
$
2,407
|
$
1,818
|
Restricted
cash
|
1,411
|
960
|
Accounts receivable,
net of allowance of $1,356 and $2,570
|
971
|
945
|
Prepaid expenses and
other
|
472
|
304
|
Notes
receivable
|
610
|
677
|
Assets of disposal
group held for sale
|
2,204
|
-
|
Total current
assets
|
8,075
|
4,704
|
|
|
|
Restricted
cash
|
2,668
|
2,581
|
Property and
equipment, net
|
77,237
|
81,213
|
Intangible assets -
bed licenses
|
2,471
|
2,471
|
Intangible assets -
lease rights, net
|
906
|
2,187
|
Goodwill
|
2,105
|
2,105
|
Lease deposits and
other deposits
|
402
|
808
|
Straight-line rent
receivable
|
6,301
|
6,400
|
Notes
receivable
|
331
|
3,540
|
Other
assets
|
74
|
542
|
Total
assets
|
$100,570
|
$106,551
|
|
|
|
LIABILITIES AND
EQUITY (DEFICIT)
|
|
|
|
|
|
Current
liabilities:
|
|
|
Current portion of
notes payable and other debt
|
$
26,397
|
$
6,621
|
Current portion of
convertible debt, net
|
-
|
1,469
|
Accounts
payable
|
4,361
|
4,386
|
Accrued expenses and
other
|
4,461
|
7,022
|
Liabilities of
disposal group held for sale
|
1,491
|
-
|
Total current
liabilities
|
36,710
|
19,498
|
|
|
|
Notes payable and
other debt, net of current portion:
|
|
|
Senior debt,
net
|
48,317
|
57,801
|
Bonds, net
|
6,599
|
6,567
|
Other debt,
net
|
-
|
644
|
Other
liabilities
|
2,793
|
4,133
|
Deferred tax
liability
|
-
|
38
|
Total
liabilities
|
94,419
|
88,681
|
|
|
|
Stockholders'
equity:
|
|
|
Common stock
and additional paid-in capital, no par value;
55,000 shares authorized;
1,688 and 1,647 shares issued and outstanding
at December 31, 2018 and
2017, respectively
|
61,900
|
61,724
|
Preferred stock, no par value; 5,000 shares authorized; 2,812
and 2,812 shares issued and
outstanding, redemption amount $70,288 and $70,288 at December 31, 2018 and 2017,
respectively
|
62,423
|
62,423
|
Accumulated
deficit
|
(118,172)
|
(106,277)
|
Total stockholders'
equity
|
6,151
|
17,870
|
Total liabilities and
stockholders' equity
|
$100,570
|
$106,551
|
REGIONAL HEALTH
PROPERTIES, INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(Amounts in 000's,
except per share data)
|
(Three Months
Ended Unaudited)
|
|
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
(Amounts in
000's)
|
2018
|
2017
|
2018
|
2017
|
Revenues:
|
|
|
|
|
Rental
revenues
|
$
5,196
|
$ 5,987
|
$
20,902
|
$ 23,690
|
Management
fees
|
246
|
242
|
949
|
930
|
Other
revenues
|
47
|
135
|
195
|
528
|
Total
revenues
|
5,489
|
6,364
|
22,046
|
25,148
|
Expenses:
|
|
|
|
|
Facility rent
expense
|
2,171
|
2,171
|
8,683
|
8,683
|
Cost of management
fees
|
190
|
135
|
638
|
634
|
Depreciation and
amortization
|
1,127
|
1,369
|
4,634
|
4,868
|
General and
administrative expenses
|
941
|
846
|
3,692
|
3,854
|
Provision for
doubtful accounts
|
198
|
431
|
4,132
|
886
|
Other operating
expenses
|
236
|
145
|
1,059
|
1,085
|
Total
expenses
|
4,863
|
5,097
|
22,838
|
20,010
|
Income (loss) from
operations
|
626
|
1,267
|
(792)
|
5,138
|
Other
expense:
|
|
|
|
|
Interest expense,
net
|
1,334
|
1,046
|
5,929
|
4,095
|
Loss on
extinguishment of debt
|
1,279
|
-
|
5,234
|
63
|
Other
expense
|
42
|
86
|
52
|
474
|
Total other expense,
net
|
2,655
|
1,132
|
11,215
|
4,632
|
|
|
|
|
|
(Loss) income from
continuing operations before income taxes
|
(2,029)
|
135
|
(12,007)
|
506
|
Income tax
benefit
|
(71)
|
(208)
|
(38)
|
(188)
|
(Loss) income from
continuing operations
|
(1,958)
|
343
|
(11,969)
|
694
|
|
|
|
|
|
Income (loss) from
discontinued operations, net of tax
|
316
|
370
|
74
|
(1,679)
|
Net (loss)
income
|
(1,642)
|
713
|
(11,895)
|
(985)
|
|
|
|
|
|
Net (loss) income
attributable to Regional Health Properties, Inc.
|
(1,642)
|
713
|
(11,895)
|
(985)
|
Preferred stock
dividends - declared
|
-
|
-
|
-
|
(5,702)
|
Preferred stock
dividends - undeclared
|
(2,249)
|
(1,912)
|
(7,985)
|
(1,912)
|
Net loss attributable
to Regional Health Properties, Inc. Common
|
|
|
|
|
Stockholders
|
$
(3,891)
|
$(1,199)
|
$
(19,880)
|
$
(8,599)
|
|
|
|
|
|
Net loss per share of
common stock attributable to
|
|
|
|
|
Regional Health
Properties, Inc.
|
|
|
|
|
Basic and
diluted:
|
|
|
|
|
Continuing operations, after
current period undeclared dividend
|
$
(2.49)
|
$
(0.95)
|
$
(11.90)
|
$
(4.19)
|
Discontinued
operations
|
0.19
|
0.22
|
0.04
|
(1.01)
|
|
$
(2.31)
|
$
(0.73)
|
$
(11.86)
|
$
(5.20)
|
|
|
|
|
|
Weighted average
shares of common stock outstanding:
|
|
|
|
|
Basic and diluted
|
1,688
|
1,650
|
1,676
|
1,653
|
|
Reclassifications
were made to the consolidated statements of operations for the
twelve months ended December 31, 2017 to conform the presentation
of: (i) management fee revenues and its related expense, previously
reported as general and administrative expense; and (ii) provision
for doubtful accounts previously reported as other operating
expenses.
|
REGIONAL HEALTH
PROPERTIES, INC. AND SUBSIDIARIES
|
SUPPLEMENTAL
OPERATING METRICS (1)
|
|
|
Three Months
Ended
|
Three Months
Ended
|
Three Months
Ended
|
Three Months
Ended
|
Portfolio Operating
Metrics (1)
|
March 31,
2018
|
June 30,
2018
|
September 30,
2018
|
December 31,
2018
|
Occupancy
(%)
|
81.3%
|
80.6%
|
83.3%
|
83.0%
|
Quality Mix
(2)
|
27.4%
|
24.2%
|
23.9%
|
29.6%
|
Rent Coverage Before
Management Fees
|
1.47
|
1.24
|
1.30
|
1.45
|
Rent Coverage After
Management Fees
|
1.07
|
0.86
|
0.91
|
1.25
|
|
(1)
|
Excludes three
Georgia facilities previously operated by affiliates of New
Beginnings Care and currently operated by Peach Health Group,
three managed facilities in Ohio, five buildings located in Ohio
and transitioned on December 1, 2018, and the one facility
located in North Carolina and transitioned on March 1,
2019.
|
|
(2)
|
Quality Mix refers to
all payor types less Medicaid.
|
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SOURCE Regional Health Properties, Inc.