SunLink Health Systems, Inc. Announces Fiscal 2013 Fourth Quarter and Full-Year Results
SunLink Health Systems, Inc. Announces Fiscal 2013 Fourth Quarter and Full-Year Results
ATLANTA--(BUSINESS WIRE)-- SunLink Health Systems, Inc. (NYSE MKT: SSY) today announced earnings from continuing operations for its fourth fiscal quarter ended June 30, 2013 of $1,629,000, or $0.17 per fully diluted share, compared to earnings from continuing operations of $3,148,000, or $0.33 per fully diluted share, for the quarter ended June 30, 2012. The results for the quarter ended June 30, 2013 include $4,016,000 of pre-tax Medicare and Medicaid electronic health records incentive payments, compared to $6,022,000 for the comparable quarter last year. Net earnings for the quarter ended June 30, 2013 were $2,163,000, or $0.23 per fully diluted share, compared to net earnings of $5,114,000, or $0.54 per fully diluted share, for the quarter ended June 30, 2012.
Consolidated net revenues from continuing operations for the quarters ended June 30, 2013 and 2012 were $25,445,000 and $26,633,000, respectively, a decrease of 4.5% in the current year's quarter. The Healthcare Facilities Segment net revenues in the current quarter of $18,536,000 increased $34,000, or 0.2%, compared to $18,502,000 for the comparable quarter of the prior year. The Specialty Pharmacy Segment revenues of $6,909,000 in the quarter ended June 30, 2013 decreased $1,222,000, or 15.0% below segment revenues of the comparable quarter of the prior year.
The company had an operating profit from continuing operations for the quarter ended June 30, 2013 of $2,638,000, compared to an operating profit from continuing operations for the quarter ended June 30, 2012 of $5,778,000. The operating margin decreased in the current year's quarter primarily due to a reduction of $2,006,000 in electronic health records incentive payments in the current year's quarter from such payments in the comparable quarter of the prior year. Adjusted EBITDA (a non-GAAP measure of the liquidity of the company) at SunLink's Healthcare Facilities Segment in the fourth fiscal quarter was $4,547,000 (which included $4,016,000 of electronic health records incentive payments) compared to $7,314,000 in the comparable quarter a year ago (which included $6,022,000 of electronic health records incentive payments). Adjusted EBITDA for SunLink's Specialty Pharmacy Segment was $98,000 in the fourth fiscal quarter compared to Adjusted EBITDA of $730,000 in the comparable quarter a year ago.
For the fiscal year ended June 30, 2013, SunLink reported a loss from continuing operations of $1,585,000, or a loss of $0.17 per fully diluted share, compared to a loss of $1,676,000, or a loss of $0.18 per fully diluted share, for the comparable period last year. For the fiscal year ended June 30, 2013, SunLink reported net earnings of $4,488,000, or $0.48 per fully diluted share, compared to net earnings of $1,081,000, or $0.12 per share, for the fiscal year ended June 30, 2012.
Consolidated net revenues from continuing operations for the fiscal year ended June 30, 2013 decreased by 4.4% to $108,225,000 compared to $113,189,000 in the comparable period a year ago. The Healthcare Facilities Segment had net revenues in the fiscal year ended June 30, 2013 of $74,911,000 compared to $75,090,000 for the comparable period a year ago. The Specialty Pharmacy Segment had $33,314,000 of net revenues for the year ended June 30, 2013 compared to $38,099,000 last year.
SunLink reported an operating loss from continuing operations for the fiscal year ended June 30, 2013 of $1,095,000 compared to an operating profit of $2,156,000 for the fiscal year ended June 30, 2012. Adjusted EBITDA for SunLink's Healthcare Facilities Segment decreased to $6,758,000 (which included $4,947,000 of electronic health records incentive payments), in the fiscal year ended June 30, 2013, from $10,739,000 last fiscal year (which included $7,294,000 of electronic health records incentive payments). Adjusted EBITDA for the year ended June 30, 2013 for the Specialty Pharmacy Segment was $892,000 compared to $1,273,000 last fiscal year.
Earnings from discontinued operations were $534,000 ($0.06 per fully diluted share) for quarter ended June 30, 2013 and $6,073,000 ($0.64 per fully diluted share) for the fiscal year ended June 30, 2013, respectively. Earnings from discontinued operations included pre-tax gains on the sale of substantially all of the assets of its subsidiary which leased and operated a hospital in Dexter, Missouri of approximately $9,289,000 and substantially all of the assets of its subsidiary which owned and operated a hospital and nursing home in Adel, Georgia of approximately $1,161,000. Over the last two years, the company has directed efforts toward the disposition of certain hospital facilities to reduce leverage and interest expense and in response to the changing nature of and increased competition in certain of its subsidiaries' hospital markets. The company has currently engaged advisors to advise us on and to assist us with the possible sale of three additional hospital facilities.
SunLink Health Systems, Inc. is the parent company of subsidiaries that operate hospitals and related businesses in the Southeast and Midwest, and a specialty pharmacy company in Louisiana. Each hospital is the only hospital in its community and 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 (used in) operations for the three and twelve months ended June 30, 2013 and 2012, 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 | Twelve Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Healthcare Facilties Adjusted EBITDA | $ | 4,547,000 | $ | 7,314,000 | $ | 6,758,000 | $ | 10,739,000 | ||||||||
Specialty Pharmacy Adjusted EBITDA | 98,000 | 730,000 | 892,000 | 1,273,000 | ||||||||||||
Corporate overhead costs | (953,000 | ) | (1,248,000 | ) | (3,907,000 | ) | (4,558,000 | ) | ||||||||
Taxes and interest expense | (1,031,000 | ) | (3,483,000 | ) | (5,131,000 | ) | (5,163,000 | ) | ||||||||
Other non-cash expenses and net change in | ||||||||||||||||
operating assets and liabilities | (330,000 | ) | 425,000 | (628,000 | ) | 791,000 | ||||||||||
Net cash provided by operations | $ | 2,331,000 | $ | 3,738,000 | $ | (2,016,000 | ) | $ | 3,082,000 | |||||||
SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES | |||||||||||||||||||||||||||||||||||||
FISCAL 2013 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, | ||||||||||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||||||||||||
% of Net | % of Net | % of Net | % of Net | ||||||||||||||||||||||||||||||||||
Amount | Revenues | Amount | Revenues | Amount | Revenues | Amount | Revenues | ||||||||||||||||||||||||||||||
Operating revenues (net of contractual allowances) | $ | 28,415 | 111.7 | % | $ | 28,995 | 108.9 | % | $ | 120,078 | 111.0 | % | $ | 123,269 | 108.9 | % | |||||||||||||||||||||
Less provision for bad debts of Healthcare Facilities Segment | 2,970 | 11.7 | % | 2,362 | 8.9 | % | 11,853 | 11.0 | % | 10,080 | 8.9 | % | |||||||||||||||||||||||||
Net Revenues | 25,445 | 100.0 | % | 26,633 | 100.0 | % | 108,225 | 100.0 | % | 113,189 | 100.0 | % | |||||||||||||||||||||||||
Costs and Expenses: | |||||||||||||||||||||||||||||||||||||
Cost of goods sold | 4,278 | 16.8 | % | 4,914 | 18.5 | % | 22,363 | 20.7 | % | 26,073 | 23.0 | % | |||||||||||||||||||||||||
Salaries, wages and benefits | 12,766 | 50.2 | % | 12,502 | 46.9 | % | 52,660 | 48.7 | % | 52,115 | 46.0 | % | |||||||||||||||||||||||||
Provision for bad debts of Specialty Pharmacy Segment | 128 | 0.5 | % | 95 | 0.4 | % | 514 | 0.5 | % | 605 | 0.5 | % | |||||||||||||||||||||||||
Supplies | 2,182 | 8.6 | % | 2,011 | 7.6 | % | 9,095 | 8.4 | % | 8,428 | 7.4 | % | |||||||||||||||||||||||||
Purchased services | 1,851 | 7.3 | % | 2,074 | 7.8 | % | 7,480 | 6.9 | % | 7,958 | 7.0 | % | |||||||||||||||||||||||||
Other operating expenses | 4,101 | 16.1 | % | 3,727 | 14.0 | % | 15,400 | 14.2 | % | 15,661 | 13.8 | % | |||||||||||||||||||||||||
Rents and leases | 464 | 1.8 | % | 538 | 2.0 | % | 1,918 | 1.8 | % | 2,191 | 1.9 | % | |||||||||||||||||||||||||
Impairments of property, plant and equipment | - | 0.0 | % | - | 0.0 | % | 789 | 0.7 | % | - | 0.0 | % | |||||||||||||||||||||||||
Impairment of goodwill | - | 0.0 | % | - | 0.0 | % | - | 0.0 | % | 931 | 0.8 | % | |||||||||||||||||||||||||
Depreciation and amortization | 1,053 | 4.1 | % | 1,016 | 3.8 | % | 4,048 | 3.7 | % | 4,365 | 3.9 | % | |||||||||||||||||||||||||
Electronic Health Records incentive programs | (4,016 | ) | -15.8 | % | (6,022 | ) | -22.6 | % | (4,947 | ) | -4.6 | % | (7,294 | ) | -6.4 | % | |||||||||||||||||||||
Operating Profit (Loss ) | 2,638 | 10.4 | % | 5,778 | 21.7 | % | (1,095 | ) | -1.0 | % | 2,156 | 21.4 | % | ||||||||||||||||||||||||
Interest Expense | (290 | ) | -1.1 | % | (986 | ) | -3.7 | % | (1,797 | ) | -1.7 | % | (4,391 | ) | -3.9 | % | |||||||||||||||||||||
Interest Income | - | 0.0 | % | 4 | 0.0 | % | 1 | 0.0 | % | 14 | 0.0 | % | |||||||||||||||||||||||||
Loss on sale of assets | - | 0.0 | % | (20 | ) | -0.1 | % | - | 0.0 | % | (20 | ) | 0.0 | % | |||||||||||||||||||||||
Earnings (Loss) from Continuing Operations before | |||||||||||||||||||||||||||||||||||||
Income Taxes | 2,348 | 9.2 | % | 4,776 | 17.9 | % | (2,891 | ) | -2.7 | % | (2,241 | ) | -2.0 | % | |||||||||||||||||||||||
Income Tax Expense (Benefit) | 719 | 2.8 | % | 1,628 | 6.1 | % | (1,306 | ) | -1.2 | % | (565 | ) | -0.5 | % | |||||||||||||||||||||||
Earnings (Loss) from Continuing Operations | 1,629 | 6.4 | % | 3,148 | 11.8 | % | (1,585 | ) | -1.5 | % | (1,676 | ) | -1.5 | % | |||||||||||||||||||||||
Earnings from Discontinued Operations, net of tax | 534 | 2.1 | % | 1,966 | 7.4 | % | 6,073 | 5.6 | % | 2,757 | 2.4 | % | |||||||||||||||||||||||||
Net Earnings (Loss) | $ | 2,163 | 8.5 | % | $ | 5,114 | 19.2 | % | $ | 4,488 | 4.1 | % | $ | 1,081 | 1.0 | ||||||||||||||||||||||
