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, reported results for the year
ended December 31, 2020.
Business Update
- Successfully transitioned two non-performing facilities
affiliated with one operator, preliminary results for transitioned
facilities for January and February 2021 very encouraging
- Collected 91% of 2020 cash rent
- Generated positive free cash flow from continuing operations
for the fourth quarter and year ended December 31, 2020, despite
covid-19 headwinds
Brent Morrison, Regional Health Properties’ Chief Executive
Officer and President, commented, “Our portfolio occupancy
experienced some softness going into yearend but we remain hopeful
that the vaccine rollout and reinstating family visitation
privileges should reverse the downward trend by the second half of
2021. We have a strong and experienced portfolio of operating
partners and remain confident in their abilities to continue to
navigate through the challenges resulting from the ongoing
pandemic.” Ben Waites, Regional’s Chief Financial Officer added
“I’m excited to join the Regional team. I look forward to
furthering the company’s progress and see Regional well positioned
to weather the storm. We see opportunities to refinance some of our
senior debt secured by U.S. Department of Housing and Urban
Development (HUD) as well as other capital structure
improvements.”
Management periodically monitors a number of facility
performance metrics, including rent coverages both before and after
management fees. In the fourth quarter of 2020, the Company’s
portfolio rent coverage before management fees was 1.77x and rent
coverage after management fees was 1.28x. Occupancy and skilled mix
for the Company’s portfolio were 67.3% and 28.4% for the fourth
quarter of 2020, respectively. These data exclude the impact of
three managed facilities located in Ohio.
Rent Collections and Operator Changes
As of the year ended December 31, 2020, we collected 80% and 82%
of contractual cash due for the fourth quarter of 2020 and twelve
months ended December 31, 2020, respectively. As of the date of
this press release, rent collections increased to 91% of
contractual cash due for the year 2020. All expected contractual
rent has been collected through March 2021.
As announced in December, we terminated a lease with the
operator of two facilities located in Georgia. One facility was
transitioned to Empire Care Centers, a new operator to Regional and
the second building is being managed by Vero Health Care, a current
leasee of the company. Preliminary operating results from January
and February for these facilities are encouraging.
Summary of Financial Results for the Three and 12 Months
Ended December 31, 2020
Total rental revenues in the fourth quarter of 2020 decreased
20.2% to $3.4 million, from $4.3 million in the fourth quarter of
2019. Total rental revenues for the 12 months ended December 31,
2020 decreased by 14.3% to $16.3 million, from $19.0 million for
the twelve months ended December 31, 2019. The decrease is
primarily a result of the agreement to terminate the subleases for
two skilled nursing facilities in the fourth quarter of 2020 (the
“Wellington Transition”) partially offset by four facilities sold
during the third quarter of 2019 (the “Asset Sale”) as well as the
disposition of two facilities we subleased “Omega Disposition” in
the first quarter of 2019.
General and administrative costs increased 62.1%, to $1.0
million for the fourth quarter of 2020, compared with $641,000 for
the same period in 2019. The increase for the fourth quarter
includes approximately $100,000 of timing differences from
recognition of Auditing and Accounting expenses (expensed as
incurred) and approximately $300,000 in legal and consulting fees
related to the Wellington Transition compared to the same period in
2019. General and administrative costs for the 12 months ended
December 31, 2020 increased by 5.7%, to $3.4 million, compared with
$3.2 million for the same period in 2019, the increase consists of
$200,000 in consulting and legal fees and other insurance.
Additionally for the 12 months ended December 31, 2020, and 2019,
general and administrative costs include $49,000 and $92,000,
respectively of stock-based compensation expense.
Provision (recovery) for doubtful accounts increased to $272,000
for the fourth quarter of 2020, compared with income of $67,000 for
the same period in 2019. Provision (recovery) for doubtful accounts
increased by approximately $1.2 million, to $925,000, for the
twelve months ended December 31, 2020, compared with income of
$281,000 for the year ended December 31, 2019. The current quarter
and year expense is related to approximately $1.4 million provision
of outstanding rent arrears and other straight-line adjustments
arising from one operator (Wellington) offset by approximately $0.5
million of rent collection from prior year payment plans.
Interest expense decreased by $44,000, or 6.0%, to $686,000 for
the fourth quarter of 2020 compared with $730,000 for the same
period in 2019. Interest expense for the 12 months ended December
31, 2020, decreased by approximately $2.5 million or 47.3%, to $2.8
million compared to $5.3 million for the same period in 2019. The
current quarter and year decrease is mainly due to the payoff of
the Pinecone and Congressional Bank loans during the prior year
from the proceeds of the Asset Sale.
Loss from discontinued operations, net of tax, for the fourth
quarter of 2020, was $51,000 compared to income from discontinued
operations, net of tax, of $215,000 for the prior year period. For
the 12 months ended December 31, 2020, loss from discontinued
operations, net of tax, was $84,000 compared to income from
discontinued operations of $626,000 for the prior year period. The
current year expense is primarily an adjustment to legacy accounts
receivable. The prior period income is due to a $200,000 credit
from one of the Company’s former attorneys, and $400,000 credit
from legacy professional and general claims.
Net loss attributable to Regional Health Properties, Inc.’s
common stockholders in the fourth quarter of 2020 was $3.3 million
compared with a net loss of $1.5 million for the fourth quarter of
2019. For the 12 months ended December 31, 2020, the net loss
attributable to Regional Health Properties, Inc.’s common
stockholders was $9.7 million, or $5.74 per basic and diluted
share, compared with a net loss of $3.5 million, inclusive of a
$6.5 million pre-tax gain on the Asset Sale and $600,000 pre-tax
gain from the Omega Disposition recognized during the first nine
months of the year ended December 31, 2019, or $2.07 per basic and
diluted share, in the prior year period.
Cash at December 31, 2020, totaled $4.2 million compared with
$4.4 million at December 31, 2019. Restricted cash at December 31,
2020, totaled $3.3 million compared to $3.7 million at December 31,
2019. Total debt outstanding at December 31, 2020 amounted to $54.4
million compared with $55.4 million at December 31, 2019 (net of
$1.3 million and $1.4 million of deferred financing costs at
December 31, 2020 and 2019, respectively).
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, manages for third parties and
operates, 24 facilities (12 of which are owned by Regional, nine of
which are leased by Regional and three of which are managed by
Regional for third parties). Effective January 1, 2021, the Company
commenced operation of one previously subleased facility as a
portfolio stabilization measure.
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, 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; the impact of COVID-19 on our business
and the business of our operators, including without limitation,
the extent and duration of the COVID-19 pandemic, increased costs
experienced by our operators in connection therewith, and the
extent to which government support may be available to our
operators to offset such costs and the conditions related thereto;
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)
ASSETS
December 31, 2020
December 31, 2019
Property and equipment, net
$
52,533
$
54,672
Cash
4,186
4,383
Restricted cash
3,306
3,655
Accounts receivable, net of allowance of
$1,381 and $615
2,100
963
Prepaid expenses and other
328
249
Notes receivable
444
840
Intangible assets - bed licenses
2,471
2,471
Intangible assets - lease rights, net
158
462
Right-of-use operating lease assets
33,740
37,287
Goodwill
1,585
1,585
Lease deposits and other deposits
514
517
Straight-line rent receivable
6,660
6,674
Total assets
$
108,025
$
113,758
LIABILITIES AND EQUITY
Senior debt, net
$
47,275
$
48,415
Bonds, net
6,342
6,409
Other debt, net
822
539
Accounts payable
3,008
3,699
Accrued expenses
2,225
2,613
Operating lease obligation
35,884
39,262
Other liabilities
1,365
1,078
Total liabilities
96,921
102,015
Stockholders' equity:
Common stock and additional paid-in
capital, no par value; 55,000 shares authorized; 1,688 shares
issued and outstanding at December 31, 2020 and December 31,
2019
62,041
61,992
Preferred stock, no par value; 5,000
shares authorized; 2,812 shares issued and outstanding, redemption
amount $70,288 at December 31, 2020 and December 31, 2019
62,423
62,423
Accumulated deficit
(113,360
)
(112,672
)
Total stockholders' equity
11,104
11,743
Total liabilities and stockholders'
equity
$
108,025
$
113,758
REGIONAL HEALTH PROPERTIES,
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Amounts in 000’s, except per
share data)
Three Months Ended December
31,
Twelve Months Ended December
31,
2020
2019
2020
2019
Revenues:
Rental revenues
$
3,427
$
4,297
$
16,325
$
19,043
Management fees
269
279
1,001
995
Other revenues
29
3
253
96
Total revenues
3,725
4,579
17,579
20,134
Expenses:
Facility rent expense
1,639
1,639
6,558
6,645
Cost of management fees
189
194
675
661
Depreciation and amortization
655
777
2,894
3,438
General and administrative expenses
1,039
641
3,373
3,192
Provision (recovery) for doubtful
accounts
272
(67
)
925
(281
)
Other operating expenses
230
196
860
1,017
Total expenses
4,024
3,380
15,285
14,672
Income from operations
(299
)
1,199
2,294
5,462
Other expense (income):
Interest expense, net
686
730
2,777
5,265
Loss on extinguishment of debt
-
(20
)
-
2,458
Gain on disposal of assets
-
-
-
(7,141
)
Other expense (income), net
(23
)
-
121
6
Total other expense (income), net
663
710
2,898
588
(Loss) income from continuing operations
before income taxes
(962
)
489
(604
)
4,874
Income tax expense
-
(44
)
-
-
(Loss) income from continuing
operations
(962
)
533
(604
)
4,874
(Loss) income from discontinued
operations, net of tax
(51
)
215
(84
)
626
Net (Loss) income
(1,013
)
748
(688
)
5,500
Preferred stock dividends - undeclared
(2,249
)
(2,249
)
(8,997
)
(8,997
)
Net (loss) income attributable to Regional
Health Properties, Inc.
Common Stockholders
$
(3,262
)
$
(1,501
)
$
(9,685
)
$
(3,497
)
Net (loss) income per share of common
stock attributable to Regional Health Properties, Inc.
Basic and diluted:
Continuing operations
$
(1.90
)
$
(1.02
)
$
(5.69
)
$
(2.44
)
Discontinued operations
$
(0.03
)
$
0.13
$
(0.05
)
$
0.37
$
(1.93
)
$
(0.89
)
$
(5.74
)
$
(2.07
)
Weighted average shares of common stock
outstanding:
Basic and diluted
1,688
1,688
1,688
1,688
REGIONAL HEALTH PROPERTIES,
INC. AND SUBSIDIARIES
SUPPLEMENTAL OPERATING METRICS
(1)
Twelve Months Ended
Twelve Months Ended
Twelve Months Ended
Twelve Months Ended
Twelve Months Ended
Portfolio Operating Metrics
(1)
December 31, 2019
March 31, 2020
June 30, 2020
September 30, 2020
December 31, 2020
Occupancy %
76.5%
76.3%
75.1%
73.0%
67.3%
Quality Mix (2)
27.9%
27.7%
28.0%
29.3%
28.4%
Rent Coverage Before Management Fees
(3)
1.57
1.59
1.55
1.58
1.77
Rent Coverage After Management Fees
(3)
1.18
1.21
1.20
1.24
1.28
(1) Excludes three managed facilities in
Ohio.
(2) Quality Mix refers to all payor types
less Medicaid.
(3) EBITDAR coverage and EBITDARM coverage
include information provided by our tenants. The Company has not
independently verified this information, but have no reason to
believe such information to be inaccurate in any material
respect.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210401005937/en/
Company Contacts Benjamin A. Waites Chief Financial
Officer and Vice President Regional Health Properties, Inc. Tel
(678) 368-4393 ben.waites@regionalhealthproperties.com
Investor Relations Brett Maas Managing Partner Hayden IR
Tel (646) 536-7331 brett@haydenir.com
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