SSY Sunlink Health Systems

SunLink Health Systems, Inc. (NYSE American: SSY) today announced a loss from continuing operations of $442,000 (or a loss of $0.06 per fully diluted share) for its first fiscal quarter ended September 30, 2024 compared to a loss from continuing operations of $428,000 (or a loss of $0.06 per fully diluted share) for the first fiscal quarter ended September 30, 2023. During the quarter ended September 30, 2024, the Company sold non-core assets for cash totaling $1,465,000, which resulted in an aggregate pre-tax gain of $694,000 in the quarter ended September 30, 2024.

Net loss for the quarter ended September 30, 2024 was $549,000 (or a loss of $0.08 per fully diluted share) compared to a net loss of $1,344,000 (or a loss of $0.19 per fully diluted share) for the quarter ended September 30, 2023. The net loss for the first fiscal quarter of 2024 included a loss from discontinued operations of $107,000 (or a loss of $0.02 per fully diluted share), which includes for the quarter an impairment loss of $44,000 on the sale of the real estate of Trace Regional Hospital, as discussed below, compared to a loss from discontinued operations of $916,000 (or a loss of $0.13 per fully diluted share) for the quarter ended September 30, 2023, substantially all of which relates to Trace Regional Hospital’s results.

The Company’s indirect subsidiary, Southern Health Corporation of Houston, Inc. (“Southern”) which sold the operations of its Trace Regional Hospital in January 2024 and its Trace Extended Care & Rehab senior care facility in Houston, Mississippi in June 2024. The real estate of Trace Regional Hospital was retained by Southern and sold in October 2024 for approximately $1,932,000. In the fiscal quarter ended September 30, 2024 the Company recorded an impairment loss of $44,000 for transaction expenses incurred through the sale date.

Consolidated net revenues for the fiscal quarters ended September 30, 2024 and 2023 were $7,923,000 and $8,555,000, respectively, which consisted primarily of pharmacy net revenues. Pharmacy net revenues for the quarter ended September 30, 2024 decreased $632,000, or 7%, from the same period last year. Approximately half of this decrease was due to $321,000 of prior period sales tax refund claims received during the quarter ended September 30, 2023. The pharmacy business also had lower retail pharmacy scripts and durable medical equipment orders filled this year.

SunLink reported an operating loss for the quarter ended September 30, 2024 of $1,194,000 compared to an operating loss for the quarter ended September 30, 2023 of $450,000. The increased operating loss this year compared to last year resulted from the decreased net revenues and higher operating costs.

Business Strategy

The Board of Directors of SunLink believes management of the Company should, among other things, actively pursue one or more extraordinary corporate transactions, any of which transactions may involve merger or consolidation with a compatible third party, as a result of which the Company's shareholders may not hold a majority of the equity in, or otherwise control the resulting entity. The Company is seeking to achieve a merger or other transaction which, among other things, provides the potential for growth in revenue and profitability on what it believes is a reasonable risk/reward basis as well as an increase in size over which to spread the costs of public company status.

COVID-19 Pandemic

The Company continues to experience post-COVID-19 pandemic after-effects in its quarter and believes it will likely to continue experience these effects on its assets and operations in the foreseeable future particularly from salaries and wages pressure, workforce shortages, supply chain disruption and broad inflationary pressures. Our ability to make estimates of any such continuing effects on future revenues, expenses or changes in accounting judgments that have had or are reasonably likely to have a material effect on our financial statements is very limited, depending as they do on the severity and length thereof; as well as any further government actions and/or regulatory changes intended to address such effects.

SunLink Health Systems, Inc. is the parent company of subsidiaries that own and operate a pharmacy business and an information technology business in the Southeast. 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, 2024 and other filings with the Securities and Exchange Commission which can be located at www.sec.gov.

SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES FISCAL 2025 FIRST QUARTER RESULTS Amounts in 000's, except per share   CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) Three Months Ended September 30,

2024

2023

% of Net % of Net Amount Revenues Amount Revenues Net revenues

$

7,923

 

 

100.0

%

$

8,555

 

100.0

%

Costs and Expenses: Cost of goods sold

 

4,475

 

 

56.5

%

 

4,771

 

55.8

%

Salaries, wages and benefits

 

3,078

 

 

38.8

%

 

2,617

 

30.6

%

Supplies

 

34

 

 

0.4

%

 

34

 

0.4

%

Purchased services

 

319

 

 

4.0

%

 

286

 

3.3

%

Other operating expenses

 

804

 

 

10.1

%

 

906

 

10.6

%

Rent and leases

 

94

 

 

1.2

%

 

91

 

1.1

%

Depreciation and amortization

 

313

 

 

4.0

%

 

300

 

3.5

%

Operating loss

 

(1,194

)

 

-15.1

%

 

(450

)

-5.3

%

  Interest Income - net

 

58

 

 

0.7

%

 

22

 

0.3

%

Gain on sale of assets

 

694

 

 

8.8

%

 

2

 

0.0

%

  Loss from Continuing Operations before Income Taxes

 

(442

)

 

-5.6

%

 

(426

)

-5.0

%

Income Tax expense

 

0

 

 

0.0

%

 

2

 

0.0

%

Loss from Continuing Operations

 

(442

)

 

-5.6

%

 

(428

)

-5.0

%

Loss from Discontinued Operations, net of tax

 

(107

)

 

-1.4

%

 

(916

)

-10.7

%

Net Loss

$

(549

)

 

-6.9

%

$

(1,344

)

-15.7

%

Loss Per Share from Continuing Operations: Basic

$

(0.06

)

$

(0.06

)

Diluted

$

(0.06

)

$

(0.06

)

Loss Per Share from Discontinued Operations: Basic

$

(0.02

)

$

(0.13

)

Diluted

$

(0.02

)

$

(0.13

)

Net Loss Per Share: Basic

$

(0.08

)

$

(0.19

)

Diluted

$

(0.08

)

$

(0.19

)

Weighted Average Common Shares Outstanding: Basic

 

7,041

 

 

7,033

 

Diluted

 

7,041

 

 

7,033

 

    SUMMARY BALANCE SHEETS September 30, June 30,

2024

2024

ASSETS Cash and Cash Equivalents

$

7,529

 

$

7,170

 

Receivable - net

 

3,011

 

 

3,371

 

Current Assets Held for Sale

 

1,915

 

 

1,959

 

Other Current Assets

 

3,161

 

 

3,164

 

Property Plant and Equipment, net

 

2,316

 

 

2,809

 

Long-term Assets

 

1,697

 

 

2,139

 

$

19,629

 

$

20,612

 

LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities

$

3,851

 

$

4,213

 

Noncurrent Liabilities

 

354

 

 

426

 

Shareholders' Equity

 

15,424

 

 

15,973

 

$

19,629

 

$

20,612

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241112751937/en/

Robert M. Thornton, Jr. Chief Executive Officer (770) 933-7004