Regional Health Properties Reports Second Quarter 2023 Financial Results

Closed exchange offer

Recorded a $43.4 million gain on extinguishment of preferred stock

ATLANTA, GA, Aug. 23, 2023 (GLOBE NEWSWIRE) -- Regional Health Properties, Inc. (the "Company," "Regional Health," "we", "us" or "our") (NYSE:RHE) (NYSE:RHE), 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 second quarter ended June 30, 2023.

SECOND QUARTER 2023 FINANCIAL AND BUSINESS HIGHLIGHTS

• Eliminated $50.4 million in accumulated and unpaid dividends on the Series A Redeemable Preferred Stock, no par value (the "Series A Preferred Stock")
• Reduced the liquidation preference of the Series A Preferred Stock to $5.00 per share
• Reduced net loss from $1.3 million in the prior year quarter to $0.7 million in the current quarter; including the $43.4 million gain on the extinguishment of the Series A Preferred Stock, net profit attributable to Regional Health common shareholders was $42.7 million for the quarter
• Generated $0.9 million of Adjusted EBITDA¹ in the quarter, compared to $0.6 million in the second quarter of 2022 and $0.3 million in the first quarter of 2023
• Collected 88% of contractual rent as of June 30, 2023
  
  

MANAGEMENT COMMENTS

Brent Morrison, Regional Health's President and Chief Executive Officer, commented, "We are beyond excited to have completed a tremendously transformative transaction for the Company. The exchange offer was a very complex and complicated transaction, but we believe it was much needed for the Company to begin to grow again. I personally want to thank our long-term shareholders for their extreme patience and, most importantly, the employees at the Company and in the facilities. We are ecstatic to enter a new chapter for the Company and intend to continue to make progress towards success for all stakeholders."

Mr. Morrison continued, "Management will continue to monitor the Company's business activity and associated cashflows while looking for ways to further simplify its capital structure. The Company was also pleased by the notice from the NYSE American that the Company's plan to regain compliance with the NYSE American's continued listing standards had been accepted, as previously disclosed, and also for the Company's newly issued 12.5% Series B Cumulative Redeemable Preferred Shares having commenced trading on the OTCQB Venture Market under the symbol ‘RHEPB'."

FINANCIAL RESULTS FOR QUARTER ENDED JUNE 30, 2023

For the second quarter 2023, the Company reported total revenue of $4.6 million, a net loss of $0.7 million, EBITDA² of $0.9 million and Adjusted EBITDA of $0.9 million.

BALANCE SHEET AND LIQUIDITY

As of June 30, 2023, the Company had $52 million of outstanding indebtedness with a weighted-average annual interest rate of 5.0% and a weighted-average maturity of approximately 19 years.

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
(in thousands)
		Three Months Ended June 30,								Six Months Ended June 30,
		2023				2022				2023				2022
Revenues:
Patient care revenues		$	2,526			$	4,570			$	4,442			$	6,881
Rental revenues			1,722				3,261				3,430				7,326
Management fees			247				255				525				519
Other revenues			103				7				107				14
Total revenues			4,598				8,093				8,504				14,740
Expenses:
Patient care expense			2,159				4,222				4,697				6,564
Facility rent expense			149				1,634				297				3,274
Cost of management fees			146				144				286				319
Depreciation and amortization			702				606				1,212				1,219
General and administrative expense			1,011				921				2,217				2,054
Doubtful accounts expense			24				466				40				2,227
Other operating expenses			221				629				313				968
Total expenses			4,412				8,622				9,062				16,625
Income/(Loss) from operations			186				(529	)			(558	)			(1,885	)
Other expense:
Interest expense, net			679				639				1,359				1,291
Other expense, net			192				157				759				1,076
Total other expense, net			871				796				2,118				2,367
Net loss		$	(685	)		$	(1,325	)		$	(2,676	)		$	(4,252	)
Preferred stock dividends - undeclared			—				(2,249	)			—				(4,498	)
Preferred stock dividends - gain on extinguishment			43,395				—				43,395				—
Net profit (loss) attributable to Regional Health Properties, Inc. common stockholders		$	42,710			$	(3,574	)		$	40,719			$	(8,750	)
Net profit (loss) per share of common stock attributable to Regional Health Properties, Inc.
Basic:		$	22.68			$	(2.02	)		$	21.74			$	(4.93	)
Diluted:		$	22.68			$	(2.02	)		$	21.73			$	(4.93	)
Weighted average shares of common stock outstanding:
Basic:			1,883,028				1,768,720				1,872,636				1,775,637
Diluted:			1,883,253				1,768,720				1,873,489				1,775,637

REGIONAL HEALTH PROPERTIES, INC.
BALANCE SHEET
(in thousands)
			June 30, 2023				December 31, 2022
			(Unaudited)
ASSETS
Property and equipment, net		$	46,266			$	46,611
Cash			1,926				843
Restricted cash			2,939				3,066
Accounts receivable, net of allowances of $1,400 and $1,298			3,023				6,289
Prepaid expenses and other			1,237				746
Notes receivable			772				1,099
Intangible assets - bed licenses			2,471				2,471
Intangible assets - lease rights, net			98				110
Right-of-use operating lease assets			2,677				2,848
Goodwill			1,585				1,585
Straight-line rent receivable			2,860				2,912
Total assets		$	65,854			$	68,580
LIABILITIES AND EQUITY
Senior debt, net		$	44,554			$	45,163
Bonds, net			5,988				6,120
Other debt, net			1,490				895
Accounts payable			3,036				3,293
Accrued expenses			4,832				5,036
Operating lease obligation			3,044				3,226
Other liabilities			1,635				1,131
Total liabilities			64,579				64,864
Stockholders' equity:
Common stock and additional paid-in capital			62,938				62,702
Preferred stock, Series A			426				62,423
Preferred stock, Series B			18,602				—
Accumulated deficit			(80,691	)			(121,409	)
Total stockholders' equity			1,275				3,716
Total liabilities and stockholders' equity		$	65,854			$	68,580

REGIONAL HEALTH PROPERTIES, INC
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
		Six Months Ended June 30,
		2023				2022
Cash flows from operating activities:
Net loss		$	(2,676	)		$	(4,252	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			1,212				1,219
Stock-based compensation expense			236				115
Rent expense (less than) in excess of cash paid			(11	)			153
Rent revenue less than (in excess) of cash received			(236	)			(73	)
Amortization of deferred financing costs, debt discounts and premiums			37				44
Bad debt expense			40				2,227
Changes in operating assets and liabilities:
Accounts receivable			3,512				(3,446	)
Prepaid expenses and other assets			797				358
Accounts payable and accrued expenses			(460	)			1,138
Other liabilities			504				(281	)
Net cash provided by (used in) operating activities			2,955				(2,798	)
Cash flows from investing activities:
Purchase of property and equipment			(854	)			(152	)
Net cash used in investing activities			(854	)			(152	)
Cash flows from financing activities:
Payment of senior debt			(624	)			(806	)
Payment of other debt			(504	)			(572	)
Debt extinguishment and issuance costs			(17	)			—
Proceeds from other debt			—				50
Repurchase of common stock			—				(46	)
Net cash used in financing activities			(1,145	)			(1,374	)
Net change in cash and restricted cash			956				(4,324	)
Cash and restricted cash, beginning			3,909				9,848
Cash and restricted cash, ending		$	4,865			$	5,524

REGIONAL HEALTH PROPERTIES, INC.
DEBT SUMMARY
(in thousands)
										June 30, 2023
		Maturity				Interest Rate				Principal				% of Principal				Deferred financing costs				Unamortized discount on bonds				Net Carrying Value
Total Fixed Rate Debt			2041				4.27	%			45,166				85.0	%			(780	)			(116	)			44,270
Total Floating Rate Debt			2036				9.17	%			7,970				15.0	%			(208	)			-				7,762
Total										$	53,136				100.0	%		$	(988	)		$	(116	)		$	52,032

Calculation of Non-GAAP Financial Measures

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

REGIONAL HEALTH PROPERTIES, INC.
RECONCILIATION OF NET(LOSS) INCOME TO NON-GAAP FINANCIAL MEASURES
(in thousands)
(Unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
		2023				2022				2023				2022
Net income (loss)		$	(685	)		$	(1,325	)		$	(2,677	)		$	(4,252	)
Depreciation and amortization			702				606				1,212				1,219
Interest expense, net			679				639				1,359				1,291
Amortization of Employee Stock Compensation			155				5				235				116
EBITDA			851				(76	)			129				(1,626	)
Bad Debt			24				466				40				1,310
Discontinued operations			(31	)			0				(31	)			0
Expenses related to preferred stock recapitalization			312				149				673				764
Other One-time Costs			1				63				264				92
Project Costs			89				0				168				0
One-time Income Adjustment - Quality Incentive Program			(301	)			0				0				0
Adjusted EBITDA from operations		$	946			$	602			$	1,243			$	540

---

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.