SunLink Health Systems, Inc. Announces Fiscal 2012 Third Quarter And Nine Month Results

SunLink Health Systems, Inc. (NYSE MKT: SSY) today announced a loss from continuing operations for its third fiscal quarter ended March 31, 2012 of $1,217,000, or a loss of $0.13 per fully diluted share, compared to a loss from continuing operations of $568,000, or a loss of $0.07 per fully diluted share for the quarter ended March 31, 2011. The results for the quarter ended March 31, 2012 include a pre-tax impairment charge of $931,000 to write down goodwill resulting from the October 2003 acquisition of two hospitals. For the nine month period ended March 31, 2012 the company reported a loss from continuing operations of $3,561,000, or a loss of $0.38 per fully diluted share, compared to a loss from continuing operations of $4,708,000, or $0.58 loss per fully diluted share, for the nine months ended March 31, 2011.

SunLink reported a net loss of $1,544,000, or a loss of $0.16 per fully diluted share for the quarter ended March 31, 2012, compared to a net loss of $314,000, or a loss of $0.04 per fully diluted share, for the comparable quarter a year ago. For the nine month period ended March 31, 2012 the company reported a net loss of $4,033,000, or a loss of $0.43 per fully diluted share, compared to a net loss of $4,848,000, or a loss of $0.60 per fully diluted share in the comparable period last year.

Consolidated net revenues from continuing operations for the quarters ended March 31, 2012 and 2011 were $39,484,000 and $42,376,000, respectively, a decrease of 6.8% in the current year’s quarter. The Healthcare Facilities Segment net revenues in the current quarter of $27,943,000 decreased $1,743,000 or 5.9%, compared to $29,686,000 from the prior year. Net revenues from state indigent care programs decreased $760,000 in the current year’s quarter compared to last year. The Specialty Pharmacy Segment revenues of $11,541,000 in the quarter ended March 31, 2012 decreased 9.1% from the prior year. Consolidated net revenues from continuing operations for the nine months ended March 31, 2012 decreased by 6.4% to $112,039,000 compared to $119,713,000 in the comparable period a year ago. The Healthcare Facilities Segment had net revenues in the nine months ended March 31, 2012 of $82,071,000 compared to $86,637,000 last year. The Specialty Pharmacy Segment had $29,968,000 of net revenue for the nine months ended March 31, 2012 compared to $33,076,000 in the comparable period a year ago.

The company had an operating loss for the quarter ended March 31, 2012 of $308,000, compared to operating profit for the quarter ended March 31, 2011 of $748,000. For the nine months ended March 31, 2012, the company had an operating loss of $1,593,000 compared to an operating loss of $843,000 for the comparable prior year period. The operating losses for the three and nine months ended March 31, 2012 include the $931,000 goodwill impairment charge discussed earlier. Adjusted EBITDA (a non-GAAP measure of liquidity of the company) for SunLink’s Healthcare Facilities Segment in the fiscal quarter ended March 31, 2012 decreased to $2,642,000 from $3,051,000 in the comparable quarter a year ago. Adjusted EBITDA for SunLink’s Specialty Pharmacy Segment was $304,000 in the third fiscal quarter compared to Adjusted EBITDA of $254,000 in the comparable quarter a year ago. Consolidated EBITDA for the third fiscal quarter was $1,831,000 compared to EBITDA of $2,191,000 for the comparable quarter a year ago. For the nine months ended March 31, 2012, consolidated EBITDA was $2,920,000 compared to $3,445,000 for the nine months ended March 31, 2011. Adjusted EBITDA for SunLink’s Healthcare Facilities Segment in the nine months ended March 31, 2012 decreased to $5,710,000 from $6,425,000 in the comparable prior year period. Adjusted EBITDA for SunLink’s Specialty Pharmacy Segment was $543,000 in the nine month period ended March 31, 2012 compared to Adjusted EBITDA of $823,000 in the comparable prior year period.

Interest expense for the quarter ended March 31, 2012 was $1,072,000, a decrease of $535,000 from $1,607,000 for the quarter ended March 31, 2011. For the nine months ended March 31, 2012, interest expense was $3,407,000, a decrease of $2,277,000 from $5,684,000 in the comparable prior year period. This decrease for both periods is due to a July 2011 $8,000,000 prepayment on the term loan of SunLink’s existing credit agreement resulting in reduced interest expense which was partially offset by an increase in interest rates.

SunLink Health Systems, Inc. currently operates five community hospitals and related businesses in the Southeast and Midwest, exclusive of Memorial Hospital of Adel that the company has contracted to sell, and also operate a specialty pharmacy company in Louisiana. Each SunLink hospital is the only hospital in its community. SunLink’s operating strategy is to link patients’ needs with dedicated physicians and health professionals to deliver quality, efficient medical care in each area it serves. For additional information on SunLink Health Systems, Inc., please visit the company’s website at www.sunlinkhealth.com.

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, 2011 and other filings with the Securities and Exchange Commission which can be located at www.sec.gov.

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 (used in) operations for the three and nine months ended March 31, 2012 and 2011, 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.
  Three Months Ended  

Nine Months Ended
March 31, March 31,
  2012       2011     2012       2011  
 

Healthcare Facilities Adjusted EBITDA
$ 2,642 $ 3,051 $ 5,710 $ 6,425
Specialty Pharmacy Adjusted EBITDA 304 254 543 823
Corporate overhead costs (1,111 ) (1,114 ) (3,333 ) (3,803 )
Taxes and interest expense (699 ) (1,253 ) (1,682 ) (3,781 )
Other non-cash expenses and net change in
operating assets and liabilities   (1,269 )   (2,253 )   (2,394 )   (2,168 )
Net cash provided by operations $ (133 ) $ (1,315 ) $ (1,156 ) $ (2,504 )
 
 
SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES
FISCAL 2012 THIRD QUARTER AND NINE
MONTH RESULTS
Amounts in 000's, except per share and volume amounts
                                               
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended March 31, Nine Months Ended March 31,
2012   2011   2012   2011  
% of Net % of Net % of Net % of Net
Amount Revenues Amount Revenues Amount Revenues Amount Revenues
Net Revenues $ 39,484 100.0 % $ 42,376 100.0 % $ 112,039 100.0 % $ 119,713 100.0 %
Costs and Expenses:
Cost of goods sold 8,418 21.3 % 9,288 21.9 % 21,159 18.9 % 23,539 19.7 %
Salaries, wages and benefits 16,212 41.1 % 16,008 37.8 % 48,068 42.9 % 47,814 39.9 %
Provision for bad debts 2,935 7.4 % 3,939 9.3 % 10,581 9.4 % 12,053 10.1 %
Supplies 2,526 6.4 % 2,730 6.4 % 7,510 6.7 % 8,452 7.1 %
Purchased services 2,286 5.8 % 2,553 6.0 % 6,945 6.2 % 7,584 6.3 %
Other operating expenses 4,602 11.7 % 4,942 11.7 % 14,395 12.8 % 14,689 12.3 %
Rents and leases 674 1.7 % 725 1.7 % 2,088 1.9 % 2,137 1.8 %
Impairment of goodwill 931 2.4 % - 0.0 % 931 0.8 % - 0.0 %
Depreciation and amortization 1,208 3.1 % 1,443 3.4 % 3,582 3.2 % 4,288 3.6 %
Medicaid E H R incentive payments   -     0.0 %   -   0.0 %   (1,627 ) -1.5 %   0.0 %
Operating Profit (Loss) (308 ) -0.8 % 748 1.8 % (1,593 ) -1.4 % (843 ) -0.7 %
 
Interest Expense (1,072 ) -2.7 % (1,607 ) -3.8 % (3,407 ) -3.0 % (5,684 ) -4.7 %
Interest Income   8     0.0 %   2   0.0 %   10   0.0 %   4   0.0 %
 
Loss from Continuing Operations before
Income Taxes (1,372 ) -3.5 % (857 ) -2.0 % (4,990 ) -4.5 % (6,523 ) -5.4 %
Income Tax Expense (Benefit)   (155 )   -0.4 %   (289 ) -0.7 %   (1,429 ) -1.3 %   (1,815 ) -1.5 %
Loss from Continuing Operations (1,217 ) -3.1 % (568 ) -1.3 % (3,561 ) -3.2 % (4,708 ) -3.9 %
Earnings (Loss) from Discontinued Operations,
net of income taxes   (327 )   -0.8 %   254   0.6 %   (472 ) -0.4 %   (140 ) -0.1 %
Net Loss $ (1,544 )   -3.9 % $ (314 ) -0.7 % $ (4,033 ) -3.6 % $ (4,848 ) -11.4 %
Loss Per Share from Continuing Operations:
Basic $ (0.13 ) $ (0.07 ) $ (0.38 ) $ (0.58 )
Diluted $ (0.13 ) $ (0.07 ) $ (0.38 ) $ (0.58 )
Earnings (Loss) Per Share from
Discontinued Operations:
Basic $ (0.03 ) $ 0.03   $ (0.05 ) $ (0.02 )
Diluted $ (0.03 ) $ 0.03   $ (0.05 ) $ (0.02 )
Net Loss Per Share:
Basic $ (0.16 ) $ (0.04 ) $ (0.43 ) $ (0.60 )
Diluted $ (0.16 ) $ (0.04 ) $ (0.43 ) $ (0.60 )
Weighted Average Common Shares Outstanding:
Basic   9,448     8,095     9,317     8,086  
Diluted   9,448     8,095     9,317     8,086  
 
HEALTHCARE FACILITIES VOLUME STATISTICS
 
Admissions 1,271 1,455 3,625 3,957
Equivalent Admissions 4,152 4,100 12,389 12,167
Surgeries 452 535 1,538 1,831
Net revenue per equivalent admission $ 6,712 $ 7,231 $ 6,600 $ 7,118
 
SUMMARY BALANCE SHEETS March 31, June 30,
2012 2011
ASSETS
Cash and Cash Equivalents $ 879 $ 7,250
Accounts Receivable - net 16,678 16,302
Other Current Assets 18,945 19,813
Property Plant and Equipment, net 30,945 33,684
Long-term Assets   15,314     14,781  
$ 82,761   $ 91,830  
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $ 47,439 $ 31,332
Long-term Debt and Other Noncurrent Liabilities 10,883 34,430
Shareholders' Equity   24,439     26,068  
$ 82,761   $ 91,830  

Copyright Business Wire 2010

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