Regional Health Properties Reports Fourth Quarter and Full Year 2023 Financial Results

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 fourth quarter and fiscal year ended December 31, 2023.

FOURTH QUARTER 2023 FINANCIAL

·

Generated $0.2 million of income from operations in the fourth quarter of 2023, compared to a loss from operations of $3.0 million in the fourth quarter of 2022

·

Reduced net loss per share of common stock to $0.13 in the fourth quarter of 2023, compared to $2.54 for the fourth quarter of 2022

·

Generated $1.8 million of Adjusted EBITDA[2] in the fourth quarter of 2023, compared to $0.6 million in the fourth quarter of 2022

FULL YEAR 2023 FINANCIAL HIGHLIGHTS

·

Reduced loss from operations from $0.8 million in fiscal year 2023 to a loss of $6.8 million in 2022

·

Increased net income per share of common stock to $21.05 in fiscal year 2023 as compared to a loss of $8.93 in fiscal year 2022

·

Generated $4.2 million of Adjusted EBITDA in fiscal year 2023, compared to in $2.4 million fiscal year 2022

·

Collected 93% of contractual rent as of December 31, 2023

FULL YEAR 2023 BUSINESS HIGHLIGHTS

·

In June 2023, Regional Health completed its offer to exchange any and all shares of its Series A Preferred Stock for shares of its Series B Preferred Stock (the "Exchange Offer").

·

In connection with the closing of the Exchange Offer, $50.4 million in accumulated and unpaid dividends on the Series A Preferred Stock was eliminated and the liquidation preference of the Series A Preferred Stock was reduced to $5.00 per share. In addition, 80% of the Series A shareholders exchanged into Series B Preferred Stock.

·

In August 2023, Regional Health announced that its 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, “2023 was a productive year for the Company. We successfully completed a transformative transaction to simplify our capital structure. With mostly low cost fixed rate debt, the transaction positions us to better access new equity capital in which to grow our real estate portfolio.

Mr. Morrison continued, “We look forward to telling our story to the investor community. We plan to attend a few investor conferences in the coming months.”

FINANCIAL RESULTS FOR QUARTER ENDED DECEMBER 31, 2023

For the fourth quarter 2023, the Company reported had total revenue of $4.5 million, a net loss of $0.2 million, EBITDA[3] of $1.0 million and Adjusted EBITDA of $1.8 million.

BALANCE SHEET, CASH FLOWS AND LIQUIDITY

As of December 31, 2023, the Company had $50.7 million of outstanding indebtedness with a weighted-average annual interest rate of 5.2% and a weighted-average maturity of approximately 19 years.

For the twelve months ended December 31, 2023, net cash provided by operating activities was $3.7 million as compared to net cash used in operating activities of $3.6 million for the twelve months ended December 31, 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, real estate portfolio, investor engagement 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 [phone]

[e-mail]

REGIONAL HEALTH PROPERTIES, INC.STATEMENT OF OPERATIONS(Amounts in 000’s except per share data)

		Three Months EndedDecember 31,								Year Ended December 31,
		2023				2022				2023				2022
Revenues:
Patient care revenues		$	2,257			$	7,410			$	8,835			$	22,060
Rental revenues			1,900				2,468				7,069				12,794
Management fees			262				270				1,050				1,045
Other revenues			103				6				210				26
Total revenues			4,522				10,154				17,164				35,925
Expenses:
Patient care expense			2,191				6,412				9,200				20,453
Facility rent expense			147				152				594				4,876
Cost of management fees			152				156				595				619
Depreciation and amortization			517				585				2,255				2,404
General and administrative expense			787				1,230				3,976				4,652
Doubtful accounts expense			881				1,174				1,150				4,916
Loss on disposal of assets			—				1,417				—				1,417
Loss on lease termination			—				1,436				—				1,436
Other operating expenses			(312	)			575				198				1,974
Total expenses			4,363				13,137				17,968				42,747
Income/(Loss) from operations			159				(2,983	)			(804	)			(6,822	)
Other expense:
Interest expense, net			684				673				2,751				2,529
Gain on extinguishment of debt			—				452				—				452
Other expense, net			(287	)			(1,864	)			333				(2,936	)
Total other expense, net			397				(739	)			3,084				45
Net loss		$	(238	)		$	(2,244	)		$	(3,888	)		$	(6,867	)
Preferred stock dividends - undeclared			—				(2,249	)			—				(8,997	)
Preferred stock dividends - gain on extinguishment			—				—				43,395				—
Net profit (loss) attributable to Regional Health Properties, Inc. common stockholders		$	(238	)		$	(4,493	)		$	39,507			$	(15,864	)
Net profit (loss) per share of common stock attributable to Regional Health Properties, Inc.
Basic:		$	(0.13	)		$	(2.54	)		$	21.05			$	(8.93	)
Diluted:		$	(0.13	)		$	(2.54	)		$	21.05			$	(8.93	)
Weighted average shares of common stock outstanding:
Basic:			1,883				1,769				1,877				1,776
Diluted:			1,883				1,769				1,877				1,776

REGIONAL HEALTH PROPERTIES, INC.BALANCE SHEET(in thousands)

		December 31,2023				December 31,2022
ASSETS
Property and equipment, net		$	45,337			$	46,611
Cash			953				843
Restricted cash			3,231				3,066
Accounts receivable, net of allowances of $2,040 and $1,298			1,403				6,289
Prepaid expenses and other			609				746
Notes receivable			1,044				1,099
Intangible assets - bed licenses			2,471				2,471
Intangible assets - lease rights, net			87				110
Right-of-use operating lease assets			2,556				2,848
Goodwill			1,585				1,585
Straight-line rent receivable			2,901				2,912
Total assets		$	62,181			$	68,580
LIABILITIES AND EQUITY
Senior debt, net		$	43,855			$	45,163
Bonds, net			5,991				6,120
Other debt, net			889				895
Accounts payable			2,493				3,293
Accrued expenses			4,060				5,036
Operating lease obligation			2,917				3,226
Other liabilities			1,791				1,131
Total liabilities			61,996				64,864
Stockholders' equity:
Common stock and additional paid-in capital			63,059				62,702
Preferred stock, Series A			426				62,423
Preferred stock, Series B			18,602				—
Accumulated deficit			(81,902	)			(121,409	)
Total stockholders' equity			185				3,716
Total liabilities and stockholders' equity		$	62,181			$	68,580

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

										December 31, 2023
		Maturity				Interest Rate				Principal				% of Principal				Deferred financing costs				Unamortized discount on bonds				Net Carrying Value
Total Fixed Rate Debt			2042				4.29	%			43,986				84.9	%			(752	)			(115	)			43,119
Total Floating Rate Debt			2036				10.17	%			7,816				15.1	%			(200	)			-				7,616
Total										$	51,802				100.0	%		$	(952	)		$	(115	)		$	50,735

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:

REGIONAL  HEALTH PROPERTIES, INC.RECONCILIATION OF NET(LOSS) INCOME TO NON-GAAP FINANCIAL MEASURES(in thousands)(Unaudited)  

		Three Months EndedDecember 31,								Twelve Months EndedDecember 31,
		2023				2022				2023				2022
Net income (loss)			(238	)			(2,244	)			(3,888	)			(6,867	)
Depreciation and amortization			517				585				2,255				2,404
Interest expense, net			684				673				2,751				2,529
Amortization of employee stock compensation			36				60				357				233
EBITDA			999				(926	)			1,475				(1,701	)
Bad debt - straight line write off			-				1,383				-				4,266
Bad debt - Increase in provision			881				150				1,159				650
Gain from write-off of liabilities and other credit balances from discontinued operations			(300	)			6				(531	)			(2,315	)
Gain on Foster leases modification			-				(140	)			-				(140	)
Expenses related to preferred stock recapitalization			13				72				863				1,328
Other one-time costs			15				-				285				92
Project costs			33				55				270				172
Tail insurance on legacy facilities			127				-				640				-
One-time income adjustment - quality incentive program			-				-				-				-
Adjusted EBITDA from operations		$	1,768			$	600			$	4,161			$	2,352

[1] As of December 31, 2023[2] Adjusted EBITDA is a non-GAAP financial measure. See “Calculation of Non-GAAP Financial Measures” for important additional information.[3] EBITDA is a non-GAAP financial measure. See “Calculation of Non-GAAP Financial Measures” for important additional information