ATLANTA--(BUSINESS WIRE)--SunLink Health Systems, Inc. (NYSE Amex Equities: SSY) today reported an operating profit from continuing operations for the quarter ended December 31, 2010 of $171,000 compared to an operating profit for the quarter ended December 31, 2009 of $77,000. Adjusted EBITDA at SunLink’s Healthcare Facilities Segment (a non-GAAP measure of the liquidity of a company) in the second fiscal quarter increased to $2,863,000 from $2,479,000 in the comparable quarter a year ago. Adjusted EBITDA for SunLink’s Specialty Pharmacy Segment in the quarter ended December 31, 2010 increased to $386,000 from $336,000 in the comparable quarter a year ago.
For the six-month period ended December 31, 2010, the company reported an operating loss of $2,437,000 compared to an operating profit of $2,125,000 in the same fiscal period a year ago. The operating profit for the six months ended December 31, 2009 included a pre-tax gain of $2,342,000 relating to the sale of three home health businesses. Adjusted EBITDA for the six-month period at SunLink’s Healthcare Facilities Segment was $2,821,000 compared to $4,308,000 in the comparable period last year. Adjusted EBITDA for SunLink’s Specialty Pharmacy Segment in the six-month period was $569,000 versus $996,000 a year ago.
Commenting on the results, Robert M. Thornton, Jr., CEO of SunLink, stated, “We have seen encouraging initial results from our initiatives to improve the operating results in our business segments, and we continue to pursue revenue and cost initiatives in both segments. However, there is still a great deal of work left to do. Over the last six months we have invested $673,000 in capital for improvements and upgrades in our facilities. We have also implemented programs in each facility to aggressively market our hospitals, physicians and clinics to our communities. We have spent over $250,000 to upgrade our technology and systems, and added two corporate information technology personnel to make our operations more efficient and create a better experience for our patients and physicians. We believe these initiatives position us to generate positive returns from an economic upturn and maintain appropriate discipline during these difficult times.”
Consolidated net revenues from continuing operations for the quarter ended December 31, 2010 decreased by 3.3% to $48,751,000 compared to $50,395,000 in the comparable period a year ago. The Healthcare Facilities Segment net revenues of $37,267,000 in the current quarter decreased $893,000, or 2.3%, from the prior year and included $1,995,000 from state indigent care programs and positive prior year third-party payor settlements compared to $1,614,000 in the quarter ended December 31, 2009. The Specialty Pharmacy Segment net revenues of $11,484,000 in the quarter ended December 31, 2010 decreased $751,000, or 6.1% from the prior year. Consolidated net revenues from continuing operations for the six months ended December 31, 2010 decreased by 5.6% to $92,955,000 compared to $98,462,000 in the comparable period a year ago. The Healthcare Facilities Segment had net revenues in the six months ended December 31, 2010 of $72,569,000 compared to $76,201,000 last year. The Specialty Pharmacy Segment had $20,386,000 of net revenue for the six months ended December 31, 2010 compared to $22,261,000 in the comparable period a year ago.
SunLink had a loss from continuing operations for its fiscal quarter ended December 31, 2010 of $2,079,000, or a loss of $0.26 per fully diluted share, compared to a loss from continuing operations of $411,000, or a loss of $0.05 per fully diluted share, for the quarter ended December 31, 2009. For the six months ended December 31, 2010, SunLink reported a loss from continuing operations of $4,724,000, or a loss of $0.58 per fully diluted share, compared to earnings from continuing operations of $138,000, or $0.02 per fully diluted share, for the six months ended December 31, 2009. Included in interest expense for the six months ended December 31, 2010 are pretax charges of approximately $1,015,000 for fees and approximately $814,000 for increased amortization of non-cash deferred financing costs, which resulted from a waiver agreement, entered into by the company in October 2010 with its primary lender. This waiver was obtained from the lender due to non-compliance with certain financial covenants at June 30, 2010. Included in the results for the six months ended December 31, 2009 is a pre-tax gain of $2,342,000 from the September 2009 sale of three home health businesses.
SunLink reported a net loss of $1,765,000, or a loss of $0.22 per fully diluted share, for the quarter ended December 31, 2010, compared to a net loss of $524,000, or $0.07 per fully diluted share for the comparable quarter a year ago. For the six months ended December 31, 2010, SunLink reported a net loss of $4,534,000, or a loss of $0.56 per fully diluted share, compared to a net loss of $28,000, or $0.00 per fully diluted share, for the comparable period last year.
SunLink Health Systems, Inc. currently operates seven community hospitals, three nursing homes and one home care business in the Southeast and Midwest and its specialty pharmacy business, SunLink ScriptsRx, 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 and healthcare products and services 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, 2010 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 six months ended December 31, 2010 and 2009, 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 and gains on sale of businesses.
| Three Months Ended | Six Months Ended | ||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||
|
Healthcare Facilities Adjusted EBITDA |
$ | 2,863,000 | $ | 2,479,000 | $ | 2,821,000 | $ | 4,308,000 | |||||||||||||
| Specialty Pharmacy Adjusted EBITDA | 386,000 | 336,000 | 569,000 | 996,000 | |||||||||||||||||
| Corporate overhead costs | (1,531,000 | ) | (1,043,000 | ) | (2,687,000 | ) | (2,164,000 | ) | |||||||||||||
| Taxes and interest expense | (2,440,000 | ) | (438,000 | ) | (2,402,000 | ) | (1,901,000 | ) | |||||||||||||
| Other non-cash expenses and net change in | |||||||||||||||||||||
| operating assets and liabilities | (1,645,000 | ) | (791,000 | ) | 313,000 | (1,200,000 | ) | ||||||||||||||
| Net cash provided by (used in) operations |
$ |
(2,367,000 |
) |
$ | 543,000 | $ | (1,386,000 | ) | $ | 39,000 | |||||||||||
| SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES | |||||||||||||||||||||||||||||||||||||
| FISCAL 2011 SECOND QUARTER AND SIX-MONTH | |||||||||||||||||||||||||||||||||||||
| RESULTS | |||||||||||||||||||||||||||||||||||||
| Amounts in 000's, except per share and volume amounts | |||||||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF EARNINGS | |||||||||||||||||||||||||||||||||||||
| Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||||||||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||||||||||||||||||
| % of Net | % of Net | % of Net | % of Net | ||||||||||||||||||||||||||||||||||
| Amount | Revenues | Amount | Revenues | Amount | Revenues | Amount | Revenues | ||||||||||||||||||||||||||||||
| Net Revenues | $ | 48,751 | 100.0 | % | $ | 50,395 | 100.0 | % | $ | 92,955 | 100.0 | % | $ | 98,462 | 100.0 | % | |||||||||||||||||||||
| Costs and Expenses: | |||||||||||||||||||||||||||||||||||||
| Cost of goods sold | 8,443 | 17.3 | % | 8,968 | 17.8 | % | 14,251 | 15.3 | % | 15,598 | 15.8 | % | |||||||||||||||||||||||||
| Salaries, wages and benefits | 19,739 | 40.5 | % | 20,082 | 39.8 | % | 39,040 | 42.0 | % | 40,042 | 40.7 | % | |||||||||||||||||||||||||
| Provision for bad debts | 5,133 | 10.5 | % | 6,014 | 11.9 | % | 11,357 | 12.2 | % | 12,526 | 12.7 | % | |||||||||||||||||||||||||
| Supplies | 3,688 | 7.6 | % | 3,981 | 7.9 | % | 7,341 | 7.9 | % | 7,849 | 8.0 | % | |||||||||||||||||||||||||
| Purchased services | 3,085 | 6.3 | % | 3,089 | 6.1 | % | 6,136 | 6.6 | % | 6,107 | 6.2 | % | |||||||||||||||||||||||||
| Other operating expenses | 6,096 | 12.5 | % | 5,681 | 11.3 | % | 12,439 | 13.4 | % | 11,572 | 11.8 | % | |||||||||||||||||||||||||
| Rents and leases | 849 | 1.7 | % | 808 | 1.6 | % | 1,688 | 1.8 | % | 1,628 | 1.7 | % | |||||||||||||||||||||||||
| Depreciation and amortization | 1,547 | 3.2 | % | 1,695 | 3.4 | % | 3,140 | 3.4 | % | 3,357 | 3.4 | % | |||||||||||||||||||||||||
| Gain on sales of Home Health businesses | - | 0.0 | % | - | 0.0 | % | - | 0.0 | % | (2,342 | ) | -2.4 | % | ||||||||||||||||||||||||
| Operating Profit (Loss) | 171 | 0.4 | % | 77 | 0.2 | % | (2,437 | ) | -2.6 | % | 2,125 | 2.2 | % | ||||||||||||||||||||||||
| Interest Expense | (3,229 | ) | -6.6 | % | (859 | ) | -1.7 | % | (4,077 | ) | -4.4 | % | (1,778 | ) | -1.8 | % | |||||||||||||||||||||
| Interest Income | 1 | 0.0 | % | 6 | 0.0 | % | 2 | 0.0 | % | 9 | 0.0 | % | |||||||||||||||||||||||||
| Earnings (Loss) from Continuing Operations | |||||||||||||||||||||||||||||||||||||
| before Income Taxes | (3,057 | ) | -6.3 | % | (776 | ) | -1.5 | % | (6,512 | ) | -7.0 | % | 356 | 0.4 | % | ||||||||||||||||||||||
| Income Tax Expense (Benefit) | (978 | ) | -2.0 | % | (365 | ) | -0.7 | % | (1,788 | ) | -1.9 | % | 218 | 0.2 | % | ||||||||||||||||||||||
| Earnings (Loss) from Continuing Operations | (2,079 | ) | -4.3 | % | (411 | ) | -0.8 | % | (4,724 | ) | -5.1 | % | 138 | 0.1 | % | ||||||||||||||||||||||
| Earnings (Loss) from Discontinued Operations, | |||||||||||||||||||||||||||||||||||||
| net of income taxes | 314 | 0.6 | % | (113 | ) | -0.2 | % | 190 | 0.2 | % | (166 | ) | -0.2 | % | |||||||||||||||||||||||
| Net Loss | $ | (1,765 | ) | -3.6 | % | $ | (524 | ) | -1.1 | % | $ | (4,534 | ) | -4.9 | % | $ | (28 | ) | 0.0 | % | |||||||||||||||||
| Earnings (Loss) Per Share from | |||||||||||||||||||||||||||||||||||||
| Continuing Operations: | |||||||||||||||||||||||||||||||||||||
| Basic | $ | (0.26 | ) | $ | (0.05 | ) | $ | (0.58 | ) | $ | 0.02 | ||||||||||||||||||||||||||
| Diluted | $ | (0.26 | ) | $ | (0.05 | ) | $ | (0.58 | ) | $ | 0.02 | ||||||||||||||||||||||||||
|
Discontinued Operations: |
|||||||||||||||||||||||||||||||||||||
| Basic | $ | 0.04 | $ | (0.01 | ) | $ | 0.02 | $ | (0.02 | ) | |||||||||||||||||||||||||||
| Diluted | $ | 0.04 | $ | (0.01 | ) | $ | 0.02 | $ | (0.02 | ) | |||||||||||||||||||||||||||
| Net Loss Per Share: | |||||||||||||||||||||||||||||||||||||
| Basic | $ | (0.22 | ) | $ | (0.07 | ) | $ | (0.56 | ) | $ | (0.00 | ) | |||||||||||||||||||||||||
| Diluted | $ | (0.22 | ) | $ | (0.07 | ) | $ | (0.56 | ) | $ | (0.00 | ) | |||||||||||||||||||||||||
| Weighted Average Common Shares Outstanding: | |||||||||||||||||||||||||||||||||||||
| Basic | 8,082 | 8,050 | 8,081 | 8,050 | |||||||||||||||||||||||||||||||||
| Diluted | 8,082 | 8,050 | 8,081 | 8,069 | |||||||||||||||||||||||||||||||||
| HEALTHCARE FACILITIES VOLUME STATISTICS | |||||||||||||||||||||||||||||||||||||
| Admissions | 1,674 | 1,858 | 3,294 | 3,708 | |||||||||||||||||||||||||||||||||
| Equivalent Admissions | 6,027 | 5,955 | 11,516 | 12,378 | |||||||||||||||||||||||||||||||||
| Surgeries | 808 | 1,018 | 1,668 | 1,979 | |||||||||||||||||||||||||||||||||
| Net revenue per equivalent admission | $ | 6,746 | $ | 6,408 | $ | 6,314 | $ | 6,156 | |||||||||||||||||||||||||||||
| SUMMARY BALANCE SHEETS | December 31, | June 30, | |||||||||||||||||||||||||||||||||||
| 2010 | 2010 | ||||||||||||||||||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents | $ | 1,231 | $ | 1,704 | |||||||||||||||||||||||||||||||||
| Accounts Receivable - net | 18,680 | 17,233 | |||||||||||||||||||||||||||||||||||
| Other Current Assets | 16,124 | 15,697 | |||||||||||||||||||||||||||||||||||
| Property Plant and Equipment, net | 39,534 | 41,356 | |||||||||||||||||||||||||||||||||||
| Long-term Assets | 20,848 | 22,500 | |||||||||||||||||||||||||||||||||||
| $ | 96,417 | $ | 98,490 | ||||||||||||||||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||||||||||||||||||||
| Current Liabilities | $ | 50,743 | $ | 19,106 | |||||||||||||||||||||||||||||||||
| Long-term Debt and Other Noncurrent Liabilities | 7,502 | 36,692 | |||||||||||||||||||||||||||||||||||
| Shareholders' Equity | 38,172 | 42,692 | |||||||||||||||||||||||||||||||||||
| $ | 96,417 | $ | 98,490 | ||||||||||||||||||||||||||||||||||