Regional Health Properties Reports Third Quarter 2023 Financial Results

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Collected 93% of Contractual Rent

Strong Operator Rent Coverage

ATLANTA, GA, Nov. 17, 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 third quarter ended September 30, 2023.

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THIRD QUARTER 2023 FINANCIAL HIGHLIGHTS

  • Reduced loss from operations from $2.0 million in the prior year quarter to $0.4 million in the current quarter
  • Reduced net loss per share of common stock to $0.52 in the current third quarter as compared to $1.48 for the third quarter of 2022
  • Generated $0.7 million of Adjusted EBITDA1 in the quarter, compared to $0.1 million in the third quarter of 2022
  • Collected 93% of contractual rent as of September 30, 2023

THIRD QUARTER BUSINESS HIGHLIGHTS

  • On August 7, 2023, Regional Health announced the receipt of the acceptance letter from the NYSE American LLC (the “Exchange”) on August 1, 2023, that the Company’s plan to regain compliance with the Exchange’s continued listing standards had been accepted.
  • On August 3, 2023, Regional Health announced that its 12.5% Series B Cumulative Redeemable Preferred Shares (the “Series B Preferred Stock”) commenced trading on the OTCQB Venture Market, operated by the OTC Markets Group, Inc., under the symbol “RHEPB”.

MANAGEMENT COMMENTS

Brent Morrison, Regional Health’s President and Chief Executive Officer, commented, “Our operating partners continue to make progress mitigating lower than average occupancy and tight labor markets. As a result, our EBITDAR 3 coverage remains strong at 1.5x. We remain hopeful this momentum will continue into the fourth quarter as well as 2024”

Mr. Morrison continued, “With the transformative transaction behind us, we continue to look for opportunities to further simplify our capital structure and further reduce corporate expenses. As our stock price continues to trade well below net asset value, management remains committed to improve transparency for investors.”

FINANCIAL RESULTS FOR QUARTER ENDED SEPTEMBER 30, 2023

For the third quarter 2023, the Company reported total revenue of $4.1 million, a net loss of $1.0 million, EBITDA2 of $0.3 million and Adjusted EBITDA of $0.7 million.

BALANCE SHEET AND LIQUIDITY

As of September 30, 2023, the Company had $51.4 million of outstanding indebtedness with a weighted-average annual interest rate of 5.1% and a weighted-average maturity of approximately 19 years.

For the nine months ended September 30, 2023, net cash provided by operating activities was $3.4 million as compared to net cash used in operating activities of $2.2 million for the nine months ended September 30, 2022.

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
[email protected]


REGIONAL HEALTH PROPERTIES, INC.
STATEMENT OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)

    Three Months Ended September 30,     Nine Months Ended September 30,  
    2023     2022     2023     2022  
Revenues:                        
Patient care revenues   $ 2,136     $ 7,769     $ 6,577     $ 14,650  
Rental revenues     1,739       3,000       5,170       10,326  
Management fees     263       255       788       774  
Other revenues           6       107       20  
Total revenues     4,138       11,030       12,642       25,770  
Expenses:                                
Patient care expense     2,313       7,476       7,010       14,040  
Facility rent expense     149       1,451       446       4,725  
Cost of management fees     156       140       442       459  
Depreciation and amortization     526       600       1,738       1,819  
General and administrative expense     972       1,378       3,190       3,432  
Doubtful accounts expense     229       1,515       269       3,742  
Other operating expenses     197       441       511       1,409  
Total expenses     4,542       13,001       13,606       29,626  
Income/(loss) from operations     (404 )     (1,971 )     (964 )     (3,856 )
Other expense:                                
Interest expense, net     708       564       2,066       1,855  
Other expense, net     (139 )     (2,164 )     620       (1,088 )
Total other (income) expense, net     569       (1,600 )     2,686       767  
Net loss   $ (973 )   $ (371 )   $ (3,650 )   $ (4,623 )
Preferred stock dividends – undeclared           (2,249 )           (6,748 )
Preferred stock dividends – gain on extinguishment                 43,395        
Net profit (loss) attributable to Regional Health Properties, Inc. common stockholders   $ (973 )   $ (2,620 )   $ 39,745     $ (11,371 )
Net profit (loss) per share of common stock attributable to Regional Health Properties, Inc.                                
Basic:   $ (0.52 )   $ (1.48 )   $ 21.18     $ (6.40 )
Diluted:   $ (0.52 )   $ (1.48 )   $ 21.18     $ (6.40 )
Weighted average shares of common stock outstanding:                                
Basic:     1,883,028       1,768,720       1,876,138       1,775,637  
Diluted:     1,883,028       1,768,720       1,876,138       1,775,637  


REGIONAL HEALTH PROPERTIES, INC.

BALANCE SHEET

(Amounts in thousands)

(Unaudited)

    September 30, 2023     December 31, 2022  
             
ASSETS                
Property and equipment, net   $ 45,806     $ 46,611  
Cash     1,427       843  
Restricted cash     3,208       3,066  
Accounts receivable, net of allowances of $1,579 and $1,298     2,035       6,289  
Prepaid expenses and other     903       746  
Notes receivable     1,060       1,099  
Intangible assets – bed licenses     2,471       2,471  
Intangible assets – lease rights, net     92       110  
Right-of-use operating lease assets     2,588       2,848  
Goodwill     1,585       1,585  
Lease deposits and other deposits     4        
Straight-line rent receivable     2,830       2,912  
Total assets   $ 64,009     $ 68,580  
LIABILITIES AND EQUITY                
Senior debt, net   $ 44,208     $ 45,163  
Bonds, net     5,989       6,120  
Other debt, net     1,181       895  
Accounts payable     2,783       3,293  
Accrued expenses     4,806       5,036  
Operating lease obligation     2,948       3,226  
Other liabilities     1,707       1,131  
Total liabilities     63,622       64,864  
                 
Stockholders’ equity:                
Common stock and additional paid-in capital     63,023       62,702  
Preferred stock, Series A     426       62,423  
Preferred stock, Series B     18,602        
Accumulated deficit     (81,664 )     (121,409 )
Total stockholders’ equity     387       3,716  
Total liabilities and stockholders’ equity   $ 64,009     $ 68,580  


REGIONAL HEALTH PROPERTIES, INC.
DEBT SUMMARY
(Amounts in thousands)
(Unaudited)

                September 30, 2023  
    Maturity     Interest Rate     Principal     % of Principal     Deferred financing costs     Unamortized discount on bonds     Net Carrying Value  
                                           
Total Fixed Rate Debt     2042       4.28 %     44,569       85.0 %     (767 )     (115 )     43,687  
                                                         
Total Floating Rate Debt     2036       9.92 %     7,895       15.0 %     (204 )           7,691  
                                                         
Total                   $ 52,464       100.0 %   $ (971 )   $ (115 )   $ 51,378  


Calculation of Non-GAAP Financial Measures

This press release presents information about EBITDA adjusted EBITDA and EBITDAR, 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:

    Three Months
Ended September 30,
    Nine Months
Ended September 30,
 
    2023     2022     2023     2022  
                         
Net income (loss)     (973 )     (371 )     (3,650 )     (4,623 )
Depreciation and amortization     526       600       1,738       1,819  
Interest expense, net     708       564       2,066       1,855  
Amortization of employee stock compensation     86       58       321       173  
EBITDA     347       851       475       (776 )
Bad debt – straight line write off     229       1,383             3,760  
Bad debt – Increase in provision           150       278       150  
Discontinuted operations     (200 )     (2,321 )     (231 )     (2,321 )
Gain on Foster leases modification           (140 )           (140 )
Expenses related to preferred stock recapitalization     95       158       768       1,232  
Other one-time costs     6       63       270       92  
Project costs     70             237        
Tail insurance on legacy facilities     127             512        
One-time income adjustment – quality incentive program                        
Adjusted EBITDA from operations   $ 674     $ 144     $ 2,309     $ 1,997  


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.
3 EBITDAR is a non-GAAP financial measure.

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