REGIONAL HEALTH PROPERTIES INC
For the period ended Jun 30, 2024. Filed Aug 13, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 13, 2024
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0000950170-24-060062
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0000950170-24-096210
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 68 previous paragraphs and 79 current paragraphs.
40 unchanged; 25 reworded; 10 added; 3 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 7 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
General and administrative expenses—General and administrative expenses were $1.2 million for the three months ended June 30, 2024, compared with $1.4 million for the same period in 2023. The difference is primarily from reduced corporate salaries resulting from fewer corporate employees and lower legal fees.
Current report
Other expense, net—Other expense, net increased by approximately $0.1 million to $0.3 million for the three months ended June 30, 2024, compared with $0.2 million for the three months ended June 30, 2023. The difference is primarily due to legacy facility related expenses.
Current report
Patient care expense—Patient care expense was flat year over year with $4.3 million for the six months ended June 30, 2024, compared with $4.3 million for the same period in 2023.
Current report
Facility rent expense—Facility rent was flat year over year with $0.3 million for the six months ended June 30, 2024, compared with $0.3 million for the same period in 2023.
Current report
Depreciation and amortization—Depreciation and amortization was mostly flat year over year with $1.0 million for the six months ended June 30, 2024, compared with $1.2 million for the same period in 2023.
Current report
NON-GAAP Financial Measures
Current report
The following table summarizes the Company's non GAAP financial measure of results based on EBITDA for the the three and six months ending June 30, 2024. EBITDA attributable to the Company's financial measure represents net income (loss) before interest expense (including amortization of deferred financing costs), amortization of stock-based compensation, and depreciation and amortization. Adjusted EBITDA represents EBITDA further adjusted to eliminate the impact of certain items that the Company does not consider indicative of core operating performance, such as recovery of previously reversed rent, lease termination revenue, property operating expenses, gains or losses from dispositions of real estate, real estate impairment charges, provision for loan losses, non-routine transaction costs, loss on extinguishment of debt, unrealized loss on other real estate related investments and provision for credit losses and lease restructuring, as applicable.
Current report
Six Months Ended June 30, 2024
Current report
Six Months Ended June 30, 2023
Current report
Net cash used in investing activities—was approximately $0.9 million. The negative cash flow was mainly from reclassified capital expenditures, new equipment, and finished capital expense projects.
Removed paragraphs (3)
Previous report
Three Months Ended March 31, 2024
Previous report
Three Months Ended March 31, 2023
Previous report
Net cash used in investing activities—was approximately $2.0 thousand. This capital expenditure was for computer hardware, software.
Reworded paragraphs (25)
Previous wording
As of March 31, 2024, we had investments of approximately $67.2 million in eleven health care real estate properties and one leased property. We currently own eleven properties, consisting of nine skilled nursing facilities and two multi-service facilities. Nine facilities are pursuant to triple-net leases, one is managed by an external manager, and one is managed internally by the Company. The Company has one leased facility that is subleased pursuant to a triple-net lease.
Current wording
As of June 30, 2024, we had investments of approximately $67.5 million in eleven health care real estate properties and one leased property. We currently own eleven properties, consisting of nine skilled nursing facilities and two multi-service facilities. Nine facilities are pursuant to triple-net leases, one is managed by an external manager, and one is managed internally by the Company. The Company has one leased facility that is subleased pursuant to a triple-net lease.
Previous wording
Rental revenues—Rental revenue for our Real Estate Services segment increased by approximately $0.1 million to $1.8 million for the three months ended March 31, 2024, compared with $1.7 million for the same period in 2023. The 6.4% increase is primarily due to the extension of the Greenfield lease and the increase in rent from the Southland facility.
Current wording
Rental revenues—Rental revenue for our Real Estate Services segment increased by approximately $0.1 million to $1.8 million for the three months ended June 30, 2024, compared with $1.7 million for the same period in 2023. The 4.5% increase is primarily due to the extension of the Greenfield lease and the increase in rent from the Springfield ALF facility.
Previous wording
Patient care expense—Patient care expense was $2.1 million for the three months ended March 31, 2024 compared with $2.3 million for the same period in 2023. The current period expense decrease of $0.2 million was primarily due to cost containment at the Glenvue and Meadowood facilities.
Current wording
Patient care expense—Patient care expense was $2.2 million for the three months ended June 30, 2024 compared with $2.0 million for the same period in 2023. The current period expense increase of $0.2 million was primarily due to increased staffing costs at the Meadowood and Glenvue facilities.
Previous wording
Facility rent expense—Facility rent was $0.1 million for the three months ended March 31, 2024, which was the same amount for the three months ended March 31, 2023.
Current wording
Facility rent expense—Facility rent was $0.1 million for the three months ended June 30, 2024, compared with $0.1 million for the same period in 2023.
Previous wording
Depreciation and amortization—Depreciation and amortization was $0.5 million for the three months ended March 31, 2024, compared to $0.5 million for the same period in 2023.
Current wording
Depreciation and amortization—Depreciation and amortization was $0.5 million for the three months ended June 30, 2024, compared with $0.7 million for the same period in 2023.
Previous wording
Doubtful accounts expense—Doubtful accounts expense primarily represents reserves taken against patient Accounts Receivable at the Glenvue facility for the three months ended March 31, 2024 and for the same period in 2023.
Current wording
Credit loss expense—Credit loss expense primarily represents reserves taken against patient Accounts Receivable at the Glenvue facility for the three months ended June 30, 2024 and for the same period in 2023.
Previous wording
Patient care revenues—Patient care revenues for the Healthcare Services segment, as a result of the Company operating the Meadowood and the Glenvue Facilities, were $2.3 million for the three months ended March 31, 2024, compared to $1.9 million for the same period in 2023. The 20.5% increase is primarily due to the change in the Medicaid reimbursement rate paid for the Glenvue facility.
Current wording
Patient care revenues—Patient care revenues for the Healthcare Services segment, as a result of the Company operating the Meadowood and the Glenvue Facilities, were $4.8 million for the six months ended June 30, 2024, compared with $4.4 million for the same period in 2023. The 8.8% increase is primarily due to the change in the Medicaid reimbursement rate paid for the Glenvue facility.
Previous wording
General and administrative expenses—General and administrative expenses were $1.6 million for the three months ended March 31, 2024 compared with $1.5 million for the same period in 2023. The difference is primarily from the 2023 allocation of costs from general and administrative expense to cost of management fees.
Current wording
General and administrative expenses—General and administrative expenses were $2.9 million for the six months ended June 30, 2024, compared with $3.0 million for the same period in 2023. The difference is primarily from the 2023 allocation of costs from general and administrative expense to cost of management fees and a reduction of corporate overhead.
Previous wording
Other (income) expense, net—Other expense, net decreased by approximately $0.6 million, to $0.0 million for the three months ended March 31, 2024, compared to $0.6 million for the three months ended March 31, 2023. The prior year expenses were related to professional and legal services incurred for the preferred exchange.
Current wording
Other expense, net—Other expense, net decreased by approximately $0.5 million to $0.2 million for the six months ended June 30, 2024, compared with $0.7 million for the same period in 2023 . The prior year expenses were related to professional and legal services incurred for the preferred exchange and legacy facility related expenses.
Previous wording
The Company intends to pursue measures to grow its operations, streamline its cost infrastructure and otherwise increase liquidity, including: (i) refinancing or repaying debt to reduce interest costs and mandatory principal repayments, with such repayment to be funded through potentially expanding borrowing arrangements with certain lenders; (ii) increasing future lease revenue through acquisitions and investments in existing properties; (iii) modifying the terms of existing leases; (iv) replacing certain tenants who default on their lease payment terms; and (v) reducing other and general and administrative expenses.
Current wording
The Company intends to pursue measures to grow its operations, sell non-core assets, streamline its cost infrastructure, and otherwise increase liquidity, including: (i) refinancing or repaying debt to reduce interest costs and mandatory principal repayments, with such repayment to be funded through potentially expanding borrowing arrangements with certain lenders; (ii) increasing future lease revenue through acquisitions and investments in existing properties; (iii) strategically dispose of facilities for operational improvements or to take advantage of high sales prices; (iv) modifying the terms of existing leases; (v) replacing certain tenants who default on their lease payment terms; and (vi) reducing other and general and administrative expenses.
Previous wording
Management anticipates access to several sources of liquidity, including cash on hand, cash flows from operations, and debt refinancing during the twelve months following the date of this filing. At March 31, 2024, the Company had $0.8 million in unrestricted cash and 1.5 million of net accounts receivable, mainly consisting of patient accounts receivable and rent receivables.
Current wording
Management anticipates access to several sources of liquidity, including cash on hand, cash flows from operations, cash flows from investing and debt refinancing during the twelve months following the date of this filing. The Company has committed to a plan to sell the Mt. Trace Property to increase cash available for operations and future investments. At June 30, 2024, the Company had $0.7 million in unrestricted cash and 1.8 million of net accounts receivable, mainly consisting of patient accounts receivable and rent receivables.
Previous wording
During the three months ended March 31, 2024, the Company's net cash provided by operating activities was $0.6 million mainly due to the timing of accounts payable and accrued expense payments. Management anticipates collecting a portion of the past due rent after the filing date and is currently negotiating various methods to collect the remaining unpaid rent and notes receivable.
Current wording
During the six months ended June 30, 2024, the Company's net cash provided by operating activities was $1.1 million mainly due to the timing of accounts payable and accrued expense payments. Management anticipates collecting a portion of the past due rent after the filing date and is currently negotiating various methods to collect the remaining unpaid rent and notes receivable.
Previous wording
As of March 31, 2024, Regional recorded an estimated allowance of $2.1 million against a gross accounts receivable of $3.5 million.
Current wording
As of June 30, 2024, Regional recorded an estimated allowance of $2.1 million against a gross accounts receivable of $3.9 million.
Previous wording
As of March 31, 2024, the Company had $50.0 million in indebtedness, net of 1.0 million deferred financing, and unamortized discounts. The Company anticipates net principal repayments of approximately $1.7 million during the next twelve-month period, approximately $1.5 million of routine debt service amortization and a $0.1 million payment of bond debt.
Current wording
As of June 30, 2024, the Company had $50.2 million in indebtedness, net of $1.0 million deferred financing, and unamortized discounts. The Company anticipates net principal repayments of approximately $2.4 million during the next twelve-month period, approximately $1.6 million of routine debt service amortization, $0.6 million of insurance financing amortization, and a $0.2 million payment of bond debt.
Previous wording
On June 30, 2023, the Company closed the Company’s offer to exchange (the “Exchange Offer”) any and all outstanding shares of the Company’s 10.875% Series A Cumulative Redeemable Preferred Shares (the “Series A Preferred Stock”) for newly issued shares of the Company’s Series B Preferred Stock. In connection with the completion of the Exchange Offer and the implementation of the Series A Charter Amendments and the Series B Charter Amendments, the liquidation preference of the Series A Preferred Stock was reduced, accumulated and unpaid dividends on the Series A Preferred Stock were eliminated and future dividends on the Series A Preferred Stock were eliminated. As a result, $50.4 million in accumulated and unpaid dividends on the Series A Preferred Stock were eliminated and, as of March 31, 2024, there are no accumulated and unpaid dividends on the Series A Preferred Stock. For further information regarding the Exchange Offer, Series A Charter Amendments and Series B Charter Amendments, see Note 9 –Common and Preferred Stock.
Current wording
On June 30, 2023, the Company closed the Company’s offer to exchange (the “Exchange Offer”) any and all outstanding shares of the Company’s 10.875% Series A Cumulative Redeemable Preferred Shares (the “Series A Preferred Stock”) for newly issued shares of the Company’s Series B Preferred Stock. In connection with the completion of the Exchange Offer and the implementation of the Series A Charter Amendments and the Series B Charter Amendments, the liquidation preference of the Series A Preferred Stock was reduced, accumulated and unpaid dividends on the Series A Preferred Stock were eliminated and future dividends on the Series A Preferred Stock were eliminated. As a result, $50.4 million in accumulated and unpaid dividends on the Series A Preferred Stock were eliminated and, as of June 30, 2024, there are no accumulated and unpaid dividends on the Series A Preferred Stock. For further information regarding the Exchange Offer, Series A Charter Amendments and Series B Charter Amendments, see Note 9 –Common and Preferred Stock. As of June 30, 2024, the Company has not redeemed any Series B Preferred Stock.
Previous wording
The Company is current with all of its debt and other financial obligations. In early 2020, the Company began ongoing efforts to investigate alternatives to retire or refinance our outstanding Series A Preferred Stock through privately negotiated transactions, open market repurchases, redemptions, exchange offers, tender offers, or otherwise.
Current wording
In early 2020, the Company began ongoing efforts to investigate alternatives to retire or refinance our outstanding Series A Preferred Stock through privately negotiated transactions, open market repurchases, redemptions, exchange offers, tender offers, or otherwise.
Previous wording
Costs associated with these efforts have been expensed as incurred in “Other expense, net” and were $0.6 million for the three months ended March 31, 2023, and there were no expenses incurred for the three months ended March 31, 2024.
Current wording
Costs associated with these efforts have been expensed as incurred in “Other expense, net” and there were no expenses incurred for the six months ended June 30, 2024 and there were $0.5 million for the six months ended June 30, 2023.
Previous wording
As of March 31, 2024, the Company was in compliance with the various financial and administrative covenants under the Company's outstanding credit related instruments except for one immaterial non-compliance. When management learned of the non-compliance, the non-compliance was cured after the balance sheet date.
Current wording
As of June 30, 2024, the Company was in compliance with the various financial and administrative covenants under the Company's outstanding credit related instruments with the exception of a noticed default under one USDA loan. The Company is working with the USDA lender to get back into compliance with the loan documents.
Previous wording
For additional information regarding the Company's liquidity, see Note 2– Liquidityand Note 8 – Notes Payable and other debt, to the consolidated financial statements included in Part I, Item 1 herein.
Current wording
For additional information regarding the Company's liquidity, see Note 2– Liquidityand Note 8 – Senior Debt and other debt, to the consolidated financial statements included in Part I, Item 1 herein.
Previous wording
Net cash provided by operating activities—was approximately $0.6 million. The positive cash flow from operating activities was mainly due to the timing of working capital accounts.
Current wording
Net cash provided by operating activities—was approximately $1.1 million. The positive cash flow from operating activities was mainly due to the timing of working capital accounts.
Previous wording
Net cash used in investing activities—was approximately $55.0 thousand. This capital expenditure was primarily for leasehold improvements.
Current wording
Net cash used in investing activities—was approximately $0.4 million. This capital expenditure was primarily for leasehold improvements.
Previous wording
Net cash used in financing activities—was approximately $0.7 million. The cash was used to make routine payments totaling $0.3 million for our Senior debt obligations, $0.4 million for other debt.
Current wording
Net cash used in financing activities—was approximately $1.3 million. The cash was used to make routine payments totaling $0.7 million for our senior debt obligations, $0.6 million for other debt.
Previous wording
Net cash provided by operating activities—was approximately $2.6 million. The positive cash flow from operating activities were largely due to collection of the ERTC.
Current wording
Net cash provided by operating activities—was approximately $3.0 million. The positive cash flow from operating activities were largely due to collection of the ERTC, collection of patient care receivables, and rent receivables.
Previous wording
Net cash used in financing activities—was approximately $0.8 million. The cash was used to make routine payments totaling $0.4 million for our Senior debt obligations, $0.4 million for other debt.
Current wording
Net cash used in financing activities—was approximately $1.1 million. The cash was used to make routine payments totaling $1.1 million for our senior debt obligations.
Previous wording
We prepare our financial statements in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Article 8 of Regulation S-X. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses. On an ongoing basis, we review our judgments and estimates, including, but not limited to, those related to doubtful accounts, income taxes, stock compensation, intangible assets and loss contingencies. We base our estimates on historical experience, business knowledge and on various other assumptions that we believe to be reasonable under the circumstances at the time. Actual results may vary from our estimates. These estimates are evaluated by management and revised as circumstances change.
Current wording
We prepare our financial statements in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Article 8 of Regulation S-X. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses. On an ongoing basis, we review our judgments and estimates, including, but not limited to, those related to credit losses, income taxes, stock compensation, intangible assets and loss contingencies. We base our estimates on historical experience, business knowledge and on various other assumptions that we believe to be reasonable under the circumstances at the time. Actual results may vary from our estimates. These estimates are evaluated by management and revised as circumstances change.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Patient care revenues—Patient care revenues for the Healthcare Services segment, as a result of the Company operating the Meadowood and the Glenvue Facilities, were $2.5 million for the three months ended June 30, 2024, compared with $2.5 million for the same period in 2023.
Current report — wording carried from elsewhere
Six Months Ended June 30, 2024 and 2023
Current report — wording carried from elsewhere
Rental revenues—Rental revenue for our Real Estate Services segment increased by approximately $0.2 million to $3.6 million for the six months ended June 30, 2024, compared with $3.4 million for the same period in 2023. The 5.5% increase is primarily due to the extension of the Greenfield lease and the increase in rent from the Southland facility.
Current report — wording carried from elsewhere
Credit loss expense—Credit loss expense primarily represents reserves taken against patient Accounts Receivable at the Glenvue facility for the six months ended June 30, 2024 and for the same period in 2023.