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SunLink Health Systems, Inc. Announces Fiscal 2015 Fourth Quarter and Full-Year Results

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September 24, 2015 5:31 PM EDT

ATLANTA--(BUSINESS WIRE)-- SunLink Health Systems, Inc. (NYSE MKT: SSY) today announced earnings from continuing operations for its fourth fiscal quarter ended June 30, 2015 of $112,000 or $0.01 per fully diluted share, compared to earnings from continuing operations of $673,000 or $0.07 per fully diluted share, for the quarter ended June 30, 2014. The results for the quarter ended June 30, 2015 included a $2,172,000 decrease of pre-tax Medicare and Medicaid electronic health incentive payments compared to the comparable quarter last year. Net earnings for the quarter ended June 30, 2015 were $92,000, or $0.01 per fully diluted share, compared to net earnings of $1,350,000, or $0.14 per fully diluted share, for the quarter ended June 30, 2014. In addition to the higher Medicare and Medicaid electronic health incentive payments in the prior year, the June 30, 2014 quarterly results included earnings from discontinued operations of $677,000.

Consolidated net revenues from continuing operations for the quarters ended June 30, 2015 and 2014 were $22,980,000 and $21,599,000, respectively, an increase of 6.4% in the current year’s fourth quarter. The Healthcare Facilities Segment net revenues in the fourth quarter of 2015 of $14,850,000 increased $331,000, or 2.1%, compared to $14,519,000 for the comparable quarter of the prior year largely due to higher patient admissions. The Specialty Pharmacy Segment revenues of $7,984,000 in the quarter ended June 30, 2015 increased $1,047,000, or 15.0%, over the comparable quarter of the prior year due primarily to an increase in institutional pharmacy sales.

The company had an operating profit from continuing operations for the quarter ended June 30, 2015 of $492,000, compared to an operating profit from continuing operations for the quarter ended June 30, 2014 of $1,814,000. The operating profit decreased in the current year’s quarter primarily due to a decrease of $2,172,000 in Medicare and Medicaid electronic health incentive payments.

For the fiscal year ended June 30, 2015, SunLink reported earnings from continuing operations of $674,000, or $0.07 per fully diluted share, compared to a loss of $333,000, or a loss of $0.04 per fully diluted share, for the comparable period last year. For the fiscal year ended June 30, 2015, SunLink reported net earnings of $245,000, or $0.03 per fully diluted share, which includes a pre-tax insurance claim settlement of $1,000,000, compared to a net loss of $545,000 or a loss of $0.06 per share, for the fiscal year ended June 30, 2014.

Consolidated net revenues from continuing operations for the fiscal year ended June 30, 2015 decreased by 0.1% to $91,833,000 compared to $91,974,000 in the comparable period a year ago. The Healthcare Facilities Segment had net revenues in the fiscal year ended June 30, 2015 of $58,019,000 compared to $58,191,000 for the comparable period a year ago. The Specialty Pharmacy Segment had $33,175,000 of net revenues for the fiscal year ended June 30, 2015 compared to $33,322,000 in the prior fiscal year.

SunLink had an operating profit from continuing operations for the fiscal year ended June 30, 2015 of $2,534,000 compared to an operating profit of $1,304,000 in the preceding year. Adjusted EBITDA (a non-GAAP measure of the liquidity of the company) for SunLink’s Healthcare Facilities Segment increased to $6,183,000 in the fiscal year ended June 30, 2015, from $5,801,000 last fiscal year. Adjusted EBITDA for the year ended June 30, 2015 for the Specialty Pharmacy Segment was $1,290,000 compared to $1,283,000 in the prior fiscal year.

Loss from discontinued operations was $20,000 (a loss of $0.00 per fully diluted share) for the quarter ended June 30, 2015 compared to earnings from discontinued operations of $677,000 ($0.07 per fully diluted share) for the quarter ended June 30, 2014, respectively. In the quarter ended June 30, 2014, discontinued operations included $412,000 pre-tax Medicare electronic health incentive payments recognized for a divested facility.

Loss from discontinued operations was $429,000 (a loss of $0.05 per fully diluted share) for the fiscal year ended June 30, 2015 compared to a loss of $212,000 (a loss of $0.02 per fully diluted share) for the fiscal year ended June 30, 2014.

SunLink Health Systems, Inc. is the parent company of subsidiaries that operate three hospitals, two nursing homes and related healthcare services and facilities in the Southeast, and a specialty pharmacy company in Louisiana. Each of the company’s healthcare services is operated locally with a strategy of linking patients’ needs with dedicated physicians and healthcare professionals to deliver quality efficient medical care. For additional information on SunLink Health Systems, Inc., please visit the company’s website at www.sunlinkhealth.com.

This press release may contain certain statements of a forward-looking nature. The statements contained herein which are not historical facts are considered forward-looking statements under federal securities laws. Such forward-looking statements are based on the beliefs of our management as well as assumptions made by and information currently available to them. The company has no obligation to update such forward-looking statements. Actual results may vary significantly from these forward-looking statements.

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 meet 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 provided by operations for the twelve months ended June 30, 2015 and 2014, 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.

     

Twelve Months Ended

June 30,
2015     2014
 
Healthcare Facilties Adjusted EBITDA $ 6,183,000 $ 5,801,000
Specialty Pharmacy Adjusted EBITDA 1,290,000 1,283,000
Corporate overhead costs (2,460,000 ) (2,661,000 )
Taxes and interest expense (1,881,000 ) (1,596,000 )

Other non-cash expenses and net change inoperating assets and liabilities

  (194,000 )   1,065,000  
Net cash provided by operations $ 2,938,000   $ 3,892,000  
 
                         
SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES
FISCAL 2015 FOURTH QUARTER AND ANNUAL
RESULTS
Amounts in 000's, except per share and volume amounts

CONSOLIDATED STATEMENTS OF EARNINGS

 

 

Three Months Ended June 30,

Twelve Months Ended June 30,

2015 2014 2015 2014
% of Net % of Net % of Net % of Net
Amount   Revenues Amount Revenues Amount Revenues Amount Revenues
Operating revenues (net of contractual allowances) $ 25,241 109.8 % $ 23,728 109.9 % $ 100,154 109.1 % $ 100,228 109.0 %
Less provision for bad debts of Healthcare Facilities Segment   2,261     9.8 %   2,129   9.9 %   8,321   9.1 %   8,254   9.0 %
Net Revenues 22,980 100.0 % 21,599 100.0 % 91,833 100.0 % 91,974 100.0 %
Costs and Expenses:
Cost of goods sold 4,789 20.8 % 4,272 19.8 % 21,042 22.9 % 22,110 24.0 %
Salaries, wages and benefits 10,992 47.8 % 10,726 49.7 % 43,127 47.0 % 42,831 46.6 %
Provision for bad debts of Specialty Pharmacy Segment 175 0.8 % 85 0.4 % 363 0.4 % 255 0.3 %
Supplies 1,412 6.1 % 1,818 8.4 % 7,429 8.1 % 7,608 8.3 %
Purchased services 1,819 7.9 % 1,211 5.6 % 5,229 5.7 % 5,095 5.5 %
Other operating expenses 2,310 10.1 % 2,719 12.6 % 9,345 10.2 % 11,686 12.7 %
Rents and leases 315 1.4 % 303 1.4 % 1,335 1.5 % 1,382 1.5 %
Insurance settlement - 0.0 % - 0.0 % (1,000 ) -1.1 % - 0.0 %
Depreciation and amortization 662 2.9 % 809 3.7 % 2,479 2.7 % 3,119 3.4 %
Electronic Health Records incentive programs   14     0.1 %   (2,158 ) -10.0 %   (50 ) -0.1 %   (3,416 ) -3.7 %
Operating Profit (Loss ) 492 2.1 % 1,814 8.4 % 2,534 2.8 % 1,304 1.4 %
 
Interest Expense - net (184 ) -0.8 % (230 ) -1.1 % (861 ) -0.9 % (944 ) -1.0 %
Gain (loss) on sale of assets   8     0.0 %   (59 ) -0.3 %   21   0.0 %   (41 ) 0.0 %
 
Earnings from Continuing Operations before
Income Taxes 316 1.4 % 1,525 7.1 % 1,694 1.8 % 319 0.3 %
Income Tax Expense (Benefit)   204     0.9 %   852   3.9 %   1,020   1.1 %   652   0.7 %
Earnings (Loss) from Continuing Operations 112 0.5 % 673 3.1 % 674 0.7 % (333 ) -0.4 %
Earnings from Discontinued Operations, net of tax   (20 )   -0.1 %   677   3.1 %   (429 ) -0.5 %   (212 ) -0.2 %
Net Earnings (Loss) $ 92     0.4 % $ 1,350   6.3 % $ 245   0.3 % $ (545 ) -0.6 %
Earnings (Loss) Per Share from Continuing Operations:
Basic $ 0.01   $ 0.07   $ 0.07   $ (0.04 )
Diluted $ 0.01   $ 0.07   $ 0.07   $ (0.04 )
Earnings Per Share from Discontinued Operations:
Basic $ (0.00 ) $ 0.07   $ (0.05 ) $ (0.02 )
Diluted $ (0.00 ) $ 0.07   $ (0.05 ) $ (0.02 )
Net Earnings (Loss) Per Share:
Basic $ 0.01   $ 0.14   $ 0.03   $ (0.06 )
Diluted $ 0.01   $ 0.14   $ 0.03   $ (0.06 )
Weighted Average Common Shares Outstanding:
Basic   9,443     9,443     9,443     9,443  
Diluted   9,490     9,476     9,496     9,456  
 

HEALTHCARE FACILITIES VOLUME STATISTICS

 
Admissions 527 536 2,440 2,405
Equivalent Admissions 1,750 1,772 7,159 7,753
Surgeries 403 477 1,612 1,817
Net revenue per equivalent admission $ 8,486 $ 8,194 $ 8,104 $ 7,506
 
SUMMARY BALANCE SHEETS June 30, June 30,
2015 2014
ASSETS
Cash and Cash Equivalents $ 5,974 $ 3,587
Accounts Receivable - net 9,625 9,850
Other Current Assets 9,493 12,338
Property Plant and Equipment, net 22,333 23,326
Long-term Assets   9,703     14,746  
$ 57,128   $ 63,847  

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities $ 10,764 $ 16,506
Long-term Debt and Other Noncurrent Liabilities 12,804 14,023
Shareholders' Equity   33,560     33,318  
$ 57,128   $ 63,847  
 

SunLink Health Systems, Inc.
Robert M. Thornton, Jr., 770-933-7004
Chief Executive Officer

Source: SunLink Health Systems, Inc.


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