REGIONAL HEALTH PROPERTIES, INC
For the period ended Dec 31, 2024. Filed Mar 31, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 31, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-04-01.
0000950170-24-039414
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-31.
0000950170-25-047742
Item 7. 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 135 previous paragraphs and 135 current paragraphs.
72 unchanged; 33 reworded; 28 added; 28 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 12 previous and 11 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 (28)
Current report
Regional Health Properties, Inc., a Georgia corporation, is a self-managed real estate investment company that invests primarily in real estate purposed for long-term care and senior housing. As of December 31, 2024, we had investments of approximately $52.8 million in eleven health care real estate facilities consisting of nine SNFs and two multi-service campuses (of which one multi-service campus contains two co-located properties) located in five states. We also lease one SNF which we sublease to a third-party operator.
Current report
We operate through two reportable segments: Real Estate and Healthcare Services. Our Real Estate segment consists of real estate investments in skilled nursing and senior housing facilities. We fund our real estate investments primarily through: (1) operational cash flow, (2) mortgages, and (3) sale of equity securities. Our Healthcare Services segment is comprised of an entity set up to operate our facilities as needed under our Portfolio Stabilization measures.
Current report
Industry Trends
Current report
Recent Activities
Current report
On November 15, 2024, the Company and Vero entered into a Lease Termination Agreement relating to the lease of Mountain Trace Rehabilitation and Nursing Center. At the same time, we entered into a management agreement with CJM Advisors to provide day-to-day oversight of the facility operations.
Current report
Management fees.— Total management fees decreased by 100% as the one contract to manage three facilities ended on December 31, 2023.
Current report
Patient care expense—Patient care expense increased by approximately $1.5 million, or 18.3%, to $9.4 million for the year ended December 31, 2024, compared with $8.0 million for the year ended December 31, 2023. The increase in patient care expense is primarily due to increase in staff wages and transitioning the Mountain Trace facility. .
Current report
General and administrative— General and administrative costs decreased by $0.0 million, or 0.1%, to $5.4 million for the year ended December 31, 2024, compared with $5.4 million for the year ended December 31, 2023. Despite the modest overall change, the change between segments was higher. For the Real Estate segment, the lack of expense related to the management of the UVMC properties in 2024 was the primary driver of the year over year change. For the Healthcare Services segment, the increase in cost was driven predominantly by increased costs associated with the transitioning the of the Mountain Trace facility.
Current report
Credit loss expense—Credit loss expense decreased by approximately $0.5 million, or 41.9%, to approximately $0.7 million, for the year ended December 31, 2024, compared with $1.2 million for the year ended December 31, 2023. This decrease in expense is primarily due to improved collections in our Healthcare Services segment, which were offset by a write off of approximately $0.4 million of notes receivable at Lumber City.
Current report
The following table presents our credit loss expense by segment:
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 years ending December 31, 2024 and 2023. EBITDA attributable to the Company's financial measure represents net income (loss) before interest expense (including amortization of deferred financing costs), provision for income tax, 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, 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
During the year ended December 31, 2024, the Company's cash provided by operating activitiesc was $1.9 million primarily due to the timing of accounts payable and accrued expense payments.. The Company is seeking collection of the past due rent. In addition, management is working to expedite the time it takes to collect and receive aged patient receivables. Cash flow from operations in the future will be based on the operational performance of the facilities the Company's operates: Glenvue, Meadowood and Mountain Trace.
Current report
On January 6, 2025, the Company and SunLink Health Systems, Inc., a Georgia corporation (“SunLink”), issued a joint press release announcing the execution of an Agreement and Plan of Merger, dated as of January 3, 2025 (the “Merger Agreement”), by and between Regional and SunLink, pursuant to which, upon the terms and subject to the conditions set forth therein, SunLink will merge with and into Regional in exchange for the issuance of an aggregate of 1,410,000 shares of Regional common stock and 1,410,000 shares of Regional’s newly-authorized Series D 8% Cumulative Convertible Redeemable Preferred Stock with a liquidation preference of $10 per share. The merger has been approved unanimously by each company’s board of directors and completion of the transaction is subject to the receipt of the approvals of the shareholders of both Regional and SunLink, regulatory approvals and satisfaction of customary closing conditions, with Regional continuing as the surviving entity. Upon closing of the Merger transaction, the Company's shareholders will own approximately 57% of the combined company. For further information, see Note 15 -Subsequent Eventsto our audited consolidated financial statements included in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report.
Current report
The Company's common stock and Series A Preferred Stock ("securities") was listed for trading on the NYSE American under the symbol “RHE” and "RHE-PA," respectively, up until February 05, 2025 when it was suspended from trading as a result of not meeting certain listing requirements. Currently, the Company's common stock and Series A Preferred Stock are listed on the OTC Market under the symbol "RHEP" and "RHEPA," respectively. On the OTC Market, selling our common stock and Series A Preferred Stock could be more difficult because smaller quantities of shares would likely be bought and sold, transactions could be delayed, and any security analysts’ coverage of us may be reduced. In addition, broker-dealers have certain regulatory burdens imposed upon them, which may discourage broker-dealers from effecting transactions in such securities, further limiting the liquidity of the common stock and Series A Preferred Stock. These factors could result in lower prices and larger spreads in the bid and ask prices for our securities. Such suspension from the NYSE American and continued or further declines in our share price could also greatly impair our ability to raise additional necessary capital through equity or debt financing and could significantly increase the ownership dilution to shareholders caused by our issuing equity in financing or other transactions. Any such limitations on our ability to raise debt and equity capital could prevent us from making future investments and satisfying maturing debt commitments.For further information, see Note 15 -Subsequent Eventsto our audited consolidated financial statements included in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report.
Current report
On October 25, 2024, the Company received a notice of acceleration and demand for payment from the lenders of Southland stating that the covenants of the deed of trust have been violated for failure to pay principal and interest. The lender accelerated the maturity dates and is requesting for the loans to be paid in full plus unpaid interest and late fees immediately.
Current report
On November 8, 2024, the Company obtained a $0.5 million line of credit with Exchange Bank. The line of credit accrues interest at 7.75% per annum with interest only payments payable monthly. As of December 31, 2024, the amount borrowed under the line of credit was $0.5 million and is included in "Other debt, net" on our audited consolidated balance sheets included in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report.
Current report
On November 22, 2024, the Company and Erin Property Holdings, LLC (the “Borrower”) entered into two Forbearance Agreements (the “Forbearance Agreements”) with Cadence Bank, N.A. (the “Lender”) relating to certain defaults by the Company and the Borrower under the loan agreements in the principal amount of $5.0 million due on July 27, 2036 (the “USDA Note”) and the principal amount of $0.8 million due on July 27, 2036 (the “SBA Note” and, together with the USDA Note, the “Notes”) that were issued by the Borrower to the Company to reflect payment obligations pursuant to the Security Agreement, dated as of July 27, 2011 (the “Security Agreement”), between the Borrower and the Lender.
Current report
Pursuant to the Forbearance Agreements, (a) the Borrower agreed to make payments of $318,044 toward the USDA Note, $47,872 toward the SBA Note and $22,000 for estimated attorney fees incurred by the Lender no later than November 22, 2024, and (b) the Company and the Lender agreed, subject to the terms and conditions set forth in the Forbearance Agreements, to forbear from exercising its rights and remedies on account of the failure by the Company and the Borrower to pay the amounts due under the USDA Note and SBA Note by the expiration of the period (“Forebearance Period”) of May 22, 2025.
Current report
During the Forebearance Period, the Company and the Borrower shall make monthly payments of principal and interest in accordance with the terms of the USDA Note and the SBA Note with interest continuing to accrue in accordance with the terms of the Notes which amounts shall remain the obligation of the Company and the Borrower.
Current report
The remaining balances of the USDA Note and the SBA Note will be due at the end of the Forbearance Period and include all principal, interest, late charges and statutory attorney's fees.
Current report
Cash Flows
Current report
During the years ended December 31, 2024 and 2023, the Company's cash provided by operating activities of $1.9 million and $3.7 million, primarily due to the timing of accounts payable and accrued expense payments. The Company is seeking collection of the past due rent from one of its operators. In addition, management is working to expedite the time it takes to collect and receive aged patient receivables. Cash flow from operations in the future will be based on the operational performance of the facilities under the company's management, Glenvue, Meadowood and Mountain Trace.
Current report
Net cash used in investing activities for the year ended December 31, 2024, was approximately $0.5 million. The negative cash flow was mainly from new equipment, and finished capital expense projects.
Current report
The Company also leased certain office space located in Suwanee, Georgia through the termination date of June 30, 2023. Effective July 1, 2023, the Company signed a sublease for 2,000 sq ft of office space in Atlanta, Georgia. The sublease expires on July 31, 2025.
Current report
As of December 31, 2024, the Company is in compliance with all operating lease financial covenants.
Current report
The Mountain Trace facility was transferred back to the Company on November 15, 2024.
Current report
As of the date of filing this Annual Report, the Company was named in two lawsuits pertaining to facilities it transitioned operations to other entities as a lessor in 2015 ("the transition"). Even though the residents were not part of our dates of service as the operator of the buildings, the lawsuits claim the Company knew the new operator had a history of providing poor patient care and therefore should not have leased or sold the premises to the new operator. In August 2024, both suits were non-suited by the plaintiff and the matters were dismissed without prejudice and the plaintiff has until August of 2025 to re-file the lawsuit. We do not believe there is any basis in law or fact to hold the previous operator/ lessor liable, and as a result management has concluded that the likelihood of a material adverse result should be remote. Despite our confidence in our legal position, we have to acknowledge that jurors sometimes follow sympathy rather than the law. For further information, Note 13 –Commitments and Contingencies to our audited consolidated financial statements included in Part II.
Removed paragraphs (28)
Previous report
Industry Trends and Uncertainties
Previous report
Portfolio Stabilization Measures. In the past our operators did not provide lease guarantees from affiliated entities. Given this, certain operators have terminated their leases in light of operational difficulties caused by the COVID-19 pandemic. While the Company is a self-managed real estate investment company that invests in real estate, when business conditions require, the Company undertakes portfolio stabilization measures. The table below summarizes the lease terminations since the onset of the COVID-19 pandemic and the Company’s resulting portfolio stabilization measures:
Previous report
On December 30, 2022, the Company and Spring Valley, LLC (“Landlord”) entered into a Lease Termination Agreement (the “Lease Termination Agreement”) relating to the lease (the “Lease”) of the following eight nursing facilities: the Powder Springs facility, the Thomasville facility, the Jeffersonville facility, the Lumber City facility, the LaGrange facility, the Tara facility, the Oceanside facility and the Savannah Beach facility (collectively, the “Foster Facilities”). The Lease Termination Agreement provides that the Lease was terminated effective as of
Previous report
December 7, 2022 (the “Lease Termination Date”). In connection with the foregoing, Tenant entered into certain Operations Transfer Agreements (the “Operations Transfer Agreements”) with each of TV Thomasville LLC, LC Lumber City LLC, LG Lagrange LLC and TB Thunderbolt LLC (the “New Operators”), each with an effective date as of the Lease Termination Date. The Operations Transfer Agreements contain market industry terms.
Previous report
Pursuant to the Lease Termination Agreement, (a) Landlord forgave all past due and current rent, late penalties, and additional rent for taxes due under the Lease as of the Lease Termination Date, as well as all accrued and unpaid interest and unpaid principal under the Promissory Note dated September 30, 2022, (b) Tenant and the Company remain liable to Landlord for any nursing home provider fees owed to the State of Georgia arising on or before the Lease Termination Date (“Unpaid Provider Fees”), (c) to fund any reimbursement for Unpaid Provider Fees, Tenant agreed to enter into a Promissory Note with a line of credit feature in favor of Landlord in the principal sum of $2,700,000 bearing an interest rate of 6.25%, payable monthly over 24 months, secured by Tenant’s accounts receivables associated with the facilities and earned prior to the Lease Termination Date, and guaranteed by the Company, and (d) except as set forth in the Lease Termination Agreement, Landlord, Tenant and the Company agreed to a release of claims. As consideration for Landlord’s agreement to enter into the Lease Termination Agreement and accelerate the expiration date of the term of the Lease, Tenant and its affiliates, including the Company, agreed to cooperate with Landlord and any third parties, including the New Operators, to continue the operation of and transfer the ownership of the Facilities with an effective date as of the Lease Termination Date.
Previous report
Patient care expense—Patient care expense decreased by approximately $11.3 million, or 55.0%, to $9.2 million for the year ended December 31, 2023, compared with $20.5 million for the year ended December 31, 2022. The 2022 expense, which required an increased level of staffing, is due to the additional facilities we operated when compared to the current year.
Previous report
General and administrative— General and administrative costs decreased by $0.7 million, or 14.5%, to $4.0 million for the year ended December 31, 2023, compared with $4.7 million for the year ended December 31, 2022. The decrease was driven predominantly by the termination of the Foster Lease.
Previous report
Provision for doubtful accounts—Provision for doubtful accounts expense decreased by approximately $3.8 million, or 76.6%, to approximately $1.1 million, for the year ended December 31, 2023, compared with $4.9 million for the year ended December 31, 2022. This decrease in expense is due to a $4.2 million provision for doubtful accounts recorded in the year ended December 31, 2022 for non-payment of rent and from reductions taken to gain cooperation in transitioning facilities to a new operator as well as the impairment of straight-line rent associated with the lease terminations of Lumber City, LaGrange, Thomasville, Glenvue, Sumter, Southland and Georgetown within our Real Estate segment.
Previous report
The following table presents our provision for doubtful accounts expense by segment:
Previous report
Loss on Disposal of Assets-The loss on the disposal of assets for the year ended December, 31, 2022 is comprised of $1.4 million of leasehold improvements made at the Foster facilities.
Previous report
Loss on Lease Termination-The loss on lease termination for the year ended December 31, 2022 is comprised of the write-off of straight line rent and a right of use asset of Lumber City, LaGrange, Thomasville, Glenvue, Sumter, Southland and Georgetown.
Previous report
Other operating expenses —Other operating expenses decreased by approximately $1.8 million, or 90.0%, to $0.2 million for the year ended December 31, 2023, compared with $2.0 million for the year ended December 31, 2022. The decrease was due to the other operating expenses no longer incurred due to the termination of the Foster Lease.
Previous report
The following table presents our other operating expenses by segment:
Previous report
Loss on extinguishment of debt— Loss on extinguishment of debt for the year ended December 31, 2022 is due to the refinancing of three facilities with the United States Housing and Urban Development ("HUD"), see Note 2 - Liquidityto our audited consolidated financial statements included in Part II, Item 8., “Financial Statements and Supplementary Data.” in this Annual Report.
Previous report
During the year ended December 31, 2023, cash provided by operating activities was $3.7 million, mostly due to the collection in accounts receivable. The Company anticipates positive cash flow from operations in the future as the patient accounts receivable is collected, subject to the continued uncertainty in the industry, including the COVID-19 pandemic, and its impact on the Company’s business, financial condition, and results of operations.
Previous report
The Company is current with all of its debt and other financial obligations. In early 2020, the Company began on-going 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 report
Series A Preferred Dividend Suspension
Previous report
Prior to the Exchange Offer, we suspended the quarterly dividend payment with respect to our Series A Preferred Stock commencing with the fourth quarter of 2017, and on June 8, 2018, the Board suspended quarterly dividend payments indefinitely with respect to the Series A Preferred Stock. Prior to the completion of the Exchange Offer, as a result of the suspension of the dividend payment on the Series A Preferred Stock commencing with the fourth quarter 2017 dividend period, the Company had approximately $50.4 million of undeclared Series A Preferred Stock dividends in arrears. The dividend suspension had provided the Company with additional funds to meet its ongoing liquidity needs. As the Company had failed to pay cash dividends on the outstanding Series A Preferred Stock in full for more than four dividends periods, the annual dividend rate on the Series A Preferred Stock for the fifth and future missed dividend periods has increased to 12.875%, which is equivalent to approximately $3.20 per share each year. As discussed above, in connection with the closing of the Exchange Offer, $50.4 million in accumulated and unpaid dividends on the Series A Preferred Stock were eliminated.
Previous report
The aggregate principal amount of the three HUD Notes is $7.8 million, and the interest rate on the three HUD Notes is 3.97% fixed for the full term of each HUD Note. The Northwood HUD Note has a principal amount of $5.0 million and matures on November 1, 2052. The Greenfield HUD Note has a principal amount of $2.0 million and matures on November 1, 2052. The Pavilion HUD Note has a principal amount of $0.8 million and matures on December 1, 2039. Payments of principal and interest on the HUD Notes commenced on October 1, 2022. Each HUD Note is secured by a Healthcare Deed to Secure Debt, Security Agreement and Assignment of Rents covering the facilities. Newpoint may declare the loans, accrued interest and any other amounts immediately due and payable upon certain customary events of default.
Previous report
Changes in Operational Liquidity
Previous report
Beginning in 2021, several of the Company’s operators have defaulted on their contractual obligations and elected to transition the facilities back to the Company. Given the complexities in identifying and negotiating with new operators, the Company was forced to become the licensed operator of the facilities, most importantly the eight leased facilities under the Foster Lease. Operating the facilities requires substantial working capital until the facilities can begin receiving the government reimbursements.
Previous report
Healthcare Services segment. As part of the Portfolio Stabilization initiative, the Company took back five facilities in 2022. In addition to becoming the licensed operator, the Company is obligated to fund the working capital needs of each facility until patient reimbursement collections begin. For the years ended December, 31 2023 and 2022, the
Previous report
Healthcare Services segment net loss was $2.8 million and $0.5 million, respectively. In addition, the gross Account Receivable for the Healthcare Services segment decreased to $2.8 million in 2023 from $6.5 million in 2022. As described in more detail as referenced in Note 6 - Leases, to our audited consolidated financial statements included in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report, the Company terminated the master lease. As of December 31, 2023 and December 31, 2022, the Company operated 2 facilities.
Previous report
Net cash used in operating activitiesfor the year ended December 31, 2022 was approximately $3.6 million, consisting primarily of our income from operations plus changes in working capital. The approximate $8.5 million decrease to the same period in the prior year includes an increase in accounts receivable of $6.6 million from the additional 5 facilities the Company operated in 2022.
Previous report
Net cash used in investing activities for the year ended December 31, 2022 was approximately $0.3 million. This capital expenditure was for computer hardware, software and furniture and fixtures for the additional facilities the Company operated in 2022.
Previous report
(a)
Previous report
As of December 31, 2022, includes $1.9 million from the Employee Retention Tax Credit (ERTC).
Previous report
As of the date of filing this Annual Report, the Company is a defendant in a total of 5 professional and general liability actions. The Company is a named party in 5 actions related directly to patient care that our current or prior tenants provided to their patients. For further information, Note 12 –Commitments and Contingencies to our audited consolidated financial statements included in Part II, and Note 14 –Subsequent Eventsto our audited consolidated financial statements included in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report.
Reworded paragraphs (33)
Previous wording
We intend to grow our Real Estate segment while diversifying our portfolio by tenant and facility type within the healthcare sector. We intend to achieve these objectives primarily through making investments directly or indirectly in healthcare real estate, including investments in joint ventures with larger health care investors.
Current wording
We intend to increase revenue and income from operations through our Healthcare Services segment by taking back operations of our leased assets while reducing the size of our Real Estate segment. We intend to achieve these objectives primarily through partnerships directly or indirectly with health care operators, including investments in joint ventures with experienced skilled nursing operators.
Previous wording
Our operations have been and are expected to continue to be impacted by economic and market conditions. Together with the ongoing impact of the COVID-19 pandemic, increases in interest rates, labor shortages, supply chain disruptions, high inflation and increased volatility in public equity and fixed income markets have led to increased costs and limited the availability of capital. In 2022, several of our operators notified us that they could not continue to maintain the lease payment given the state of the facilities operations. In addition, one operator was notified by the State of Alabama to transition the facility to a new operators or the state was going to shut down the facility.
Current wording
Our operations and our facility operations have been and are expected to continue to be impacted by economic and market conditions. Together with the ongoing impact of the COVID-19 pandemic, increases in interest rates, labor shortages, supply chain disruptions, high inflation and increased volatility in public equity and fixed income markets have led to increased costs and limited the availability of capital.
Previous wording
Patient care revenues— Patient care revenues for our Healthcare Services segment, decreased by approximately $13.3 million, or 60.0%, to $8.8 million for the year ended December 31, 2023 from approximately $22.1 million for the year ended December 31, 2022 because of the termination of the Foster Lease.
Current wording
Patient care revenues— Patient care revenues for our Healthcare Services segment, increased by approximately $2.5 million, or 27.6%, to $11.3 million for the year ended December 31, 2024 from approximately $8.8 million for the year ended December 31, 2023. The increase was due to an increase in patient reimbursement rates and facility census and the transition of the Mountain Trace facility to the Healthcare Services segment.
Previous wording
Rental revenues.— Total rental revenue decreased by approximately $5.7 million, or 44.7%, to $7.1 million for the year ended December 31, 2023, compared with $12.8 million for the year ended December 31, 2022. The decrease was due to the termination of the Foster Lease and taking over operations at Glenvue in 2022. For further information see Note 6 - Leases, to our audited consolidated financial statements in Part II, Item 8., “Financial Statements and Supplementary Data” included in this Annual Report.
Current wording
Rental revenues.— Total rental revenue decreased by approximately $0.1 million, or 0.9%, to $7.0 million for the year ended December 31, 2024, compared with $7.1 million for the year ended December 31, 2023. The decrease was due to the transitioning the Mountain Trace facilities to our Healthcare Services segment. For further information see Note 7 - Leases, to our audited consolidated financial statements in Part II, Item 8., “Financial Statements and Supplementary Data” included in this Annual Report.
Previous wording
Other revenues—Other revenues increased by approximately $0.2 million, or 707.7%, to $0.2 million for the year ended December 31, 2023, compared with approximately $0.0 million for the year ended December 31, 2022. The rise in revenue is due to the release of rent liability by the Covington landlord for satisfying performance terms.
Current wording
Other revenues—Other revenues decreased by approximately $0.1 million, or 72.9%, to $0.1 million for the year ended December 31, 2024, compared with approximately $0.2 million for the year ended December 31, 2023. The decrease in revenue is due to the December 2023 release of rent liability by Rookwood, the Covington landlord, for satisfying performance terms of the Covington lease.
Previous wording
Facility rent expense—Facility rent decreased by approximately $4.3 million, or 87.8%, to $0.6 million for the year ended December 31, 2023, compared with approximately $4.9 million for the year ended December 31, 2022. The decrease is due to the termination of the Foster Lease in December 2022.
Current wording
Facility rent expense—Facility rent remained consistent totaling $0.6 million for the year ended December 31, 2024 and 2023.
Previous wording
Depreciation and amortization—Depreciation and amortization decreased by approximately $0.1 million, or 6.2%, to $2.3 million for the year ended December 31, 2023, compared with $2.4 million for the year ended December 31, 2022. The decrease is primarily due to the reduction in depreciation from fully depreciated equipment and computer related assets in the current year along with the cessation of depreciation for leasehold improvements associated the termination of the Foster Lease.
Current wording
Depreciation and amortization—Depreciation and amortization decreased by approximately $0.2 million, or 8.6%, to $2.1 million for the year ended December 31, 2024, compared with $2.3 million for the year ended December 31, 2023. The decrease is primarily due to the reduction in depreciation from fully depreciated equipment and computer related assets in the current year.
Previous wording
Interest expense, net—Interest expense, net increased by approximately $0.2 million, or 8.8%, to $2.7 million for the year ended December 31, 2023, compared with $2.5 million for the year ended December 31, 2022. The increase was from the variable rate debt for Sylva and Southland. See Note 8– Notes Payableand Other Debt to our audited consolidated financial statements included in Part II, Item 8., “Financial Statements and Supplementary Data.” of this Annual Report.
Current wording
Interest expense, net—Interest expense, net decreased by approximately $0.0 million, or 1.5%, to $2.7 million for the year ended December 31, 2024, compared with $2.8 million for the year ended December 31, 2023. The decrease was from the variable rate debt for the Mountain Trace and Southland mortgages. See Note 9– Notes Payableand Other Debt to our audited consolidated financial statements included in Part II, Item 8., “Financial Statements and Supplementary Data.” of this Annual Report.
Previous wording
Other expense, net— Other expense, net increased by approximately $3.2 million, or 111.3%, to $0.3 million for the year ended December 31, 2023, compared with -$2.9 million in the year ended December 31, 2022. The increase is primarily due to the gain recognized for unclaimed property in 2022 offset by professional fees associated with the Exchange Offer.
Current wording
Other expense, net— Other expense, net remained consistent totaling $0.7 million for the years ended December 31, 2024 and 2023.
Previous wording
Management anticipates access to several sources of liquidity, including cash on hand, collection of patient accounts receivable, and debt refinancing during the twelve months from the date of this filing. At December 31, 2023, the Company had $1.0 million in unrestricted cash and $1.4 million of net accounts receivable, mainly consisting of patient account receivables, which the Company plans to collect over the next twelve months.
Current wording
Management anticipates access to several sources of liquidity, including but not limited to: cash on hand, collection of patient and rent accounts receivable, debt refinancing, and debt borrowings, asset sales, and/or through the sale of additional securities or otherwise during the twelve months from the date of this filing. At December 31, 2024, the Company had $0.6 million in unrestricted cash and $3.4 million of net accounts receivable, consisting of patient and rent account receivables, which the Company plans to collect over the next twelve months. See Note 15 –Subsequent Eventsto our audited consolidated financial statements included in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report for information on the Company's press release on January 6, 2024 announcing the execution of an Agreement and Plan of Merger.
Previous wording
In connection with the completion of the Exchange Offer and the implementation of certain amendments to the Charter, 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 December 31, 2023, there are no accumulated and unpaid dividends on the Series A Preferred Stock. For further information regarding the Exchange Offer, see Note 10 – Common and Preferred Stock to our audited consolidated financial statements included in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report.
Current wording
In connection with the completion of the Exchange Offer and the implementation of certain amendments to the Charter, 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 December 31, 2024 and December 31, 2023, there are no accumulated and unpaid dividends on the Series A Preferred Stock. Costs associated with these efforts have been expensed as incurred in “General and administrative expenses" and were $0.9 million for the year ended December 31, 2023. For further information regarding the Exchange Offer, see Note 11 –Common and Preferred Stock to our audited consolidated financial statements included in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report.
Previous wording
Debt Refinance. For the year ended December 31, 2023, the Company did not refinance any debt. On October 21, 2022, the Company, through wholly-owned subsidiaries, consummated a HUD refinancing of its senior mortgages on three SNFs in Ohio. Funding was provided by Newpoint Real Estate Capital LLC ("Newpoint") pursuant to three HUD guaranteed secured Healthcare Facility Notes (the "HUD Notes"). Proceeds from the HUD Notes were used to pay off existing HUD guaranteed secured mortgages and pay transaction costs. Newpoint is the servicer on other loans extended to the Company.
Current wording
Debt Refinance. For the years ended December 31, 2024 and December 31, 2023, the Company did not refinance any debt.
Previous wording
Debt Modification. For the year ended December 31, 2023, the Company did not modify any debt. On December 30, 2022, the Company extended the maturity date on approximately $0.5 million other debt from August 25, 2023, to August 25, 2025 (known as the “KeyBank Exit Notes”).
Current wording
Debt Modification. For the years ended December 31, 2024 and December 31, 2023, the Company did not modify any debt.
Previous wording
As of December 31, 2023, the Company had $50.7 million in indebtedness, net of $1.1 million deferred financing and unamortized discounts. The Company anticipates net principal repayments of approximately $1.9 million during the next twelve-month period, which include approximately $1.3 million of routine debt service amortization, approximately $0.4 million payments on other non-routine debt and a $0.2 million payment of bond debt.
Current wording
As of December 31, 2024, the Company had $49.7 million in indebtedness, net of $1.0 million deferred financing and unamortized discounts. The Company anticipates net principal repayments of approximately $7.0 million during the next twelve-month period, which include approximately $1.4 million of routine debt service amortization, approximately $1.3 million payments on other non-routine debt, $4.1 million of debt due from forbearance agreement, and a $0.2 million payment of bond debt.
Previous wording
In connection with a master sublease agreement as amended on March 30, 2018, originally dated June 18, 2016, that the Company entered into with affiliates of Peach Health, the Company extended a line of credit to Peach Health (the “Peach Line”), which was subordinated to a line of credit extended to Peach Health by a third-party lender (the “Peach Working Capital Facility”). On August 27, 2020, subsequent to Peach Health repaying their Peach Working Capital Facility, the Company and Peach Health modified the Peach Line to: (i) reduce the then-outstanding $1.3 million balance under the Peach Line to approximately $0.5 million, in connection with which Peach Health paid to the Company $0.45 million in cash and the Company accepted $0.35 million non-cash payment in exchange for Peach Health assuming from the Company certain bed tax liabilities related to facilities their affiliates operate; (ii) extend the maturity date of the Peach Line to August 1, 2025; (iii) decrease the interest rate from 16.5% to 8% per annum; and (iv) Peach Health agreed not to pledge, hypothecate or grant any security interest in their collateral to any other party, other than their current arrangement with the U.S. Small Business Administration (the “SBA”), without the Company’s prior written consent. The remaining balance under the Peach Line will be paid by Peach Health to the Company in 60 equal monthly installments. As of December 31, 2023, in accordance with the Peach Line terms, 20 such installments remain.
Current wording
In connection with a master sublease agreement as amended on March 30, 2018, originally dated June 18, 2016, that the Company entered into with affiliates of Peach Health, the Company extended a line of credit to Peach Health (the “Peach Line”), which was subordinated to a line of credit extended to Peach Health by a third-party lender (the “Peach Working Capital Facility”). On August 27, 2020, subsequent to Peach Health repaying their Peach Working Capital Facility, the Company and Peach Health modified the Peach Line to: (i) reduce the then-outstanding $1.3 million balance under the Peach Line to approximately $0.5 million, in connection with which Peach Health paid to the Company $0.45 million in cash and the Company accepted $0.35 million non-cash payment in exchange for Peach Health assuming from the Company certain bed tax liabilities related to facilities their affiliates operate; (ii) extend the maturity date of the Peach Line to August 1, 2025; (iii) decrease the interest rate from 16.5% to 8% per annum; and (iv) Peach Health agreed not to pledge, hypothecate or grant any security interest in their collateral to any other party, other than their current arrangement with the U.S. Small Business Administration (the “SBA”), without the Company’s prior written consent. The remaining balance under the Peach Line will be paid by Peach Health to the Company in 60 equal monthly installments. As of December 31, 2023, in accordance with the Peach Line terms, 20 such installments remain. In August 2024, the Company agreed to net the amount owed to Peach against the balance on the Peach Line to the Company. As of December 31, 2024, there are no remaining installment payments due under the Peach Line.
Previous wording
Effective October, 21, 2022, the Company terminated the leases for two SNFs located in South Carolina with affiliates of Dawn Healthcare (a subsidiary of Symmetry Healthcare Management). As part of the termination, Dawn Healthcare entered into a promissory note to pay the Company $407,199 in 14 installments of $29,085 each beginning in January 2023.
Current wording
Effective October, 21, 2022, the Company terminated the leases for two SNFs located in South Carolina with affiliates of Dawn Healthcare (a subsidiary of Symmetry Healthcare Management). As part of the termination, Dawn Healthcare entered into a promissory note to pay the Company $407,199 in 14 installments of $29,085 each beginning in January 2023. In February 2023, Symmetry Healthcare Management made the first of 14 monthly payments of $29,085. The Company accepted a lump sum payment of $250,000 as payoff for the remaining promissory note balance.
Previous wording
In May 2022, in connection with the Operations Transfer Agreement for Lumber City, Beacon Health and the Company entered into a promissory note in the amount of $546,690. The balance will be paid over 24 months in amount of $24,000 per month. The principal balance will accrue at the rate of 8% annually.
Current wording
In May 2022, in connection with the Operations Transfer Agreement for Lumber City, Beacon Health and the Company entered into a promissory note in the amount of $546,690. Under the terms of this promissory note, the balance was to be paid over 24 months in the amount of $24,000 per month, and the principal balance to accrue interest at the rate of 8% annually. In September 2024, the Company wrote off $395,000 of the promissory note as a credit loss expense . As of December 31, 2024, the principal note receivable balance remaining is $150,690.
Previous wording
On August 11, 2023, the Company and its former tenant, SL SNF, LLC, entered into a lease amendment (the “Amendment”) regarding the Southland facility. The amendment reduces the monthly rent to $43,000 effective April 1, 2023 and includes a $312,000 promissory note (the “Promissory Note”). The lease termination date under the amendment is October 31, 2024. Under the terms of the Promissory Note, the principal sum plus all accrued interest, accruing on the unpaid principal balance at a rate of 8% per annum, is due and payable on December 1, 2024, with minimum monthly payments of principal and interest of $18,353 per month beginning on July 1, 2023.
Current wording
On August 11, 2023, the Company and its former tenant, SL SNF, LLC, entered into a lease amendment (the “Amendment”) regarding the Southland facility. The amendment reduces the monthly rent to $43,000 effective April 1, 2023 and includes a $312,000 promissory note (the “Promissory Note”). Under the terms of the Promissory Note, the principal sum plus all accrued interest, accruing on the unpaid principal balance at a rate of 8% per annum, is due and payable on December 1, 2024, with minimum monthly payments of principal and interest of $18,353 per month beginning on July 1, 2023. As of December 31, 2024, the principal note receivable balance remaining is $218,148.The lease termination date under the amendment is October 31, 2024. SL SNF, LLC and the Company agreed to work collaboratively towards a orderly transition of the facility back to the Company. See Note 15 –Subsequent Eventsto our audited consolidated financial statements included in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report for information
Previous wording
Net cash provided by operating activities for the year ended December 31, 2023 was approximately $3.7 million, consisting primarily of changes in our working capital accounts totaling $7.8 million offset by our net loss of $4.0 million. This is approximately the same amount of cash used in operating activities compared to the same period in the prior year which includes an increase in accounts receivable of $6.6 million offset by $4.9 million of bad debt expense from the additional 5 facilities the Company operated in 2022.
Current wording
Net cash provided by operating activities for the year ended December 31, 2024 was approximately $1.9 million, consisting primarily of non-cash net expenses of $2.3 million and net changes in our working capital accounts totaling $2.8 million offset by our net loss of $3.2 million.
Previous wording
Net cash used in investing activities for the year ended December 31, 2023, was approximately $1.0 million. These capital expenditure was primarily used from escrow funds funded by our operators.
Current wording
Net cash used in investing activities for the year ended December 31, 2023 was approximately $1.0 million. These capital expenditure were primarily purchased from escrow funds funded by our operators.
Previous wording
At December 31, 2023, the Company was in compliance with the various Financial Covenants and Administrative Covenants related to all of the Company’s credit facilities.
Current wording
At December 31, 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 notice of default under one USDA loan secured by the Southland and an SBA loan secured by Southland. On October 25, 2024, the Company received a notice of acceleration and demand for payment from the lenders of Southland stating that the covenants of the deed of trust have been violated for failure to pay principal and interest. The lender accelerated the maturity dates and is requesting for the loans to be paid in full plus unpaid interest and late fees immediately. On November 22, 2024, the Company and Erin Property Holdings entered into two Forbearance Agreements with the lender relating to certain defaults by the Company and the Borrower under the loan agreements.
Previous wording
As of December 31, 2023 and December 31, 2022, the Company reserved for approximately $2.1 million and $1.3 million, respectively, of uncollected receivables. We continually evaluate the adequacy of our bad debt reserves based on aging of older balances, payment terms and historical collection trends. Accounts receivable, net totaled $1.4 million at December 31, 2023 compared with $6.3 million at December 31, 2022.
Current wording
As of December 31, 2024 and December 31, 2023, the Company reserved for approximately $0.1 million and $2.1 million, respectively, of uncollected receivables. We continually evaluate the adequacy of our bad debt reserves based on aging of older balances, payment terms and historical collection trends. Accounts receivable, net totaled $3.4 million at December 31, 2024 compared with $1.4 million at December 31, 2023.
Previous wording
As of December 31, 2023, the Company leased a total of one SNF under non-cancelable leases, which has a rent escalation clause and provisions for payments of real estate taxes, insurance and maintenance costs; the SNF is leased by the Company and then subleased to and operated by a third-party operator. The Company took over operations at the LaGrange and Lumber City locations in May of 2022, the Thomasville location in July of 2022, and the Glenvue location in August of 2022, all of which were previously subleased SNFs.
Current wording
As of December 31, 2024, the Company leases one SNF under a non-cancelable lease, which has a rent escalation clause and provisions for payments of real estate taxes, insurance and maintenance costs; the SNF is leased by the Company and then subleased to and operated by a third-party operator.
Previous wording
As of December 31, 2023, eleven facilities (ten owned by us and one leased to us) are leased or subleased on a triple net basis, meaning that the lessee (i.e., the third-party operator of the property, or the Company with respect to the operated facilities) is obligated under the lease or sublease, as applicable, for all liabilities of the property in respect to insurance, taxes and facility maintenance, as well as the lease or sublease payments, as applicable.
Current wording
As of December 31, 2024, ten facilities (nine owned by us and one leased to us) are leased or subleased on a triple net basis, meaning that the lessee (i.e., the third-party operator of the property, or the Company with respect to the operated facilities) is obligated under the lease or sublease, as applicable, for all liabilities of the property in respect to insurance, taxes and facility maintenance, as well as the lease or sublease payments, as applicable.
Previous wording
Southland's revenue is recognized when received and is not straight-lined.
Current wording
Southland lease revenue is recognized when received
Previous wording
The Company maintains insurance for professional and general liability claims for its Healthcare Services segment however, for claims prior to January 1, 2020, the Company is self-insured against professional and general liability claims since it discontinued its healthcare operations in connection with transitioning all of the Company's facilities in 2015. The Company established a self-insurance reserve for these professional and general liability claims, included within “Accrued expenses” in the Company’s audited consolidated balance sheets of $0.1 million and $0.1 million at December 31, 2023, and December 31, 2022, respectively.
Current wording
The Company maintains insurance for professional and general liability claims for its Healthcare Services segment however, for claims prior to January 1, 2020, the Company is self-insured against professional and general liability claims since it discontinued its healthcare operations in connection with the transition. The Company established a self-insurance reserve for these professional and general liability claims, included within “Accrued expenses” in the Company’s audited consolidated balance sheets of $0.1 million and $0.1 million at December 31, 2024, and December 31, 2023, respectively.
Previous wording
We have prepared our financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). These principles are numerous and complex. 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 revenue recognition, doubtful accounts, income taxes, stock compensation, intangible assets, extinguishment of debt, self-insurance reserve 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 have prepared our financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). These principles are numerous and complex. The preparation of these consolidated 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 revenue recognition, doubtful accounts, income taxes, stock compensation, intangible assets, extinguishment of debt, self-insurance reserve 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.
Previous wording
Patient Care Revenue. The Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”) requires a company to recognize revenue when the company transfers control of promised goods and services to a customer. Revenue is recognized in an amount that reflects the consideration to which a company expects to receive in exchange for such goods and services. Revenue from our new Healthcare Services business segment is derived from services rendered to patients in the Tara Facility. The Company receives payments from the following sources for services rendered in our facilities: (i) the federal government under the Medicare program administered by CMS; (ii) state governments under their respective Medicaid and similar programs; (iii) commercial insurers; and (iv) individual patients and clients. The vast majority (greater than 90%) of the revenue the Company has recognized is from government sources. The Company determines the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients and other price concessions. Contractual adjustments and discounts are based on contractual agreements, discount policies and historical experience. The Company recognizes revenue at the amount that reflects the consideration the Company expects to receive in exchange for the services provided. These amounts are due from residents or third-party payors and include variable consideration for retroactive adjustments from estimated reimbursements, if any, under reimbursement programs. Performance obligations, such as providing room and board, wound care, intravenous drug therapy, physical therapy, and quality of life activities amongst others, are determined based on the nature of the services provided. Revenue is recognized as performance obligations are satisfied. Estimated uncollectable amounts due from patients are generally considered implicit price concessions that are a direct reduction to net patient care revenues.
Current wording
Patient Care Revenue. The Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”) requires a company to recognize revenue when the company transfers control of promised goods and services to a customer. Revenue is recognized in an amount that reflects the consideration to which a company expects to receive in exchange for such goods and services. Revenue from our Healthcare Services business segment is derived from services rendered to patients in the Glenvue, Meadowood and Mountain Trace Facilities. The Company receives payments from the following sources for services rendered in our facilities: (i) the federal government under the Medicare program administered by CMS; (ii) state governments under their respective Medicaid and similar programs; (iii) commercial insurers; and (iv) individual patients and clients. The vast majority (greater than 90%) of the revenue the Company has recognized is from government sources. The Company determines the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients and other price concessions. Contractual adjustments and discounts are based on contractual agreements, discount policies and historical experience. The Company recognizes revenue at the amount that reflects the consideration the Company expects to receive in exchange for the services provided. These amounts are due from residents or third-party payors and include variable consideration for retroactive adjustments from estimated reimbursements, if any, under reimbursement programs. Performance obligations, such as providing room and board, wound care, intravenous drug therapy, physical therapy, and quality of life activities amongst others, are determined based on the nature of the services provided. Revenue is recognized as performance obligations are satisfied. Estimated uncollectible amounts due from patients are generally considered implicit price concessions that are a direct reduction to net patient care revenues.
Previous wording
Triple-Net Leased Properties. Triple-Net Leased Properties. The Company’s triple-net leases provide for periodic and determinable increases in rent. The Company recognizes rental revenues under these leases on a straight-line basis over the applicable lease term when collectability is probable. FASB Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, as codified in ASC 606, does not apply to rental revenues, which are the Company’s primary source of revenue. Recognizing rental income on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a straight-line rent receivable that is included in straight-line rent receivable on our consolidated balance sheets. In the event the Company cannot reasonably estimate the future collection of rent from one or more tenant(s) of the Company’s facilities, rental income for the affected facilities is recognized only upon cash collection, and any accumulated straight-line rent receivable is expensed in the period in which the Company deems rent collection to no longer be probable. For additional information with respect to such facilities, see Note 6 - Leases to our audited consolidated financial statements in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report.
Current wording
Triple-Net Leased Properties. The Company’s triple-net leases provide for periodic and determinable increases in rent. The Company recognizes rental revenues under these leases on a straight-line basis over the applicable lease term when collectability is probable. FASB Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, as codified in ASC 606, does not apply to rental revenues, which is a significant source of the Company’s revenue. Recognizing rental income on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a straight-line rent receivable that is included in straight-line rent receivable on our consolidated balance sheets. In the event the Company cannot reasonably estimate the future collection of rent from one or more tenant(s) of the Company’s facilities, rental income for the affected facilities is recognized only upon cash collection, and any accumulated straight-line rent receivable is expensed in the period in which the Company deems rent collection to no longer be probable. For additional information with respect to such facilities, see Note 7 - Leases to our audited consolidated financial statements in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report.
Previous wording
Management Fee Revenues and Other Revenues. The Company recognizes management fee revenues as services are provided in accordance with ASC 606. The Company has one contract to manage three facilities (the “Management Contract”), with payment for each month of service generally received in full on a monthly basis. The maximum penalty for service contract nonperformance under the Management Contract is $50,000 per year, payable after the end of the year. Further, the Company recognizes interest income from loans and investments, using the effective interest method when collectability is probable. The Company applies the effective interest method on a loan-by-loan basis.
Current wording
Management Fee Revenues and Other Revenues. The Company recognizes management fee revenues as services are provided in accordance with ASC 606. The Company had one contract to manage three facilities (the “Management Contract”) which ended on December 31, 2023. Further, the Company recognizes interest income from loans and investments, using the effective interest method when collectability is probable. The Company applies the effective interest method on a loan-by-loan basis.
Previous wording
As of December 31, 2023, and December 31, 2022, the Company reserved for approximately $2.1 million and $1.3 million, respectively, of uncollected receivables. Accounts receivable, net totaled $1.4 million at December 31, 2023 compared with $6.3 million at December 31, 2022.
Current wording
As of December 31, 2024, and December 31, 2023, the Company reserved for approximately $0.1 million and $2.1 million, respectively, of uncollected receivables. Accounts receivable, net totaled $3.4 million at December 31, 2024 compared with $1.4 million at December 31, 2023.
Previous wording
The Company maintains insurance for professional and general liability claims for its Healthcare Services segment, which includes the Tara Facility or any other facility, such as the Meadowood Facility which the Company is likely to operate, however for claims prior to January 1, 2020, the Company is self-insured against professional and general liability claims since it discontinued its healthcare operations in connection with the transitioning all of our facilities in 2015. The Company evaluates quarterly the adequacy of its self-insurance reserve based on a number of factors, including: (i) the number of actions pending and the relief sought; (ii) analyses provided by defense counsel, medical experts or other information which comes to light during discovery; (iii) the legal fees and other expenses anticipated to be incurred in defending the actions; (iv) the status and likely success of any mediation or settlement discussions, including estimated settlement amounts and legal fees and other expenses anticipated to be incurred in such settlement, as applicable; and (v) the venues in which the actions have been filed or will be adjudicated. The Company believes that most of the professional and general liability actions are defensible and intends to defend them through final judgment unless settlement is more advantageous to the Company. Accordingly, the self-insurance reserve reflects the Company’s estimate of settlement amounts for the pending actions, if applicable, and legal costs of settling or litigating the pending actions, as applicable. Because the self-insurance reserve is based on estimates, the amount of the self-insurance reserve may not be sufficient to cover the settlement amounts actually incurred in settling the pending actions, or the legal costs actually incurred in settling or litigating the pending actions. See Note 7 –Accrued Expenses and Note 13 -Commitments and Contingencies to our audited consolidated financial statements in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report.
Current wording
The Company maintains insurance for professional and general liability claims for its Healthcare Services segment, which includes the Tara Facility or any other facility, such as the Meadowood, Glenvue and Mountain Trace Facilities which the Company currently operates, however for claims prior to January 1, 2020, the Company is self-insured against professional and general liability claims since it discontinued its healthcare operations in connection with the transition. The Company evaluates quarterly the adequacy of its self-insurance reserve based on a number of factors, including: (i) the number of actions pending and the relief sought; (ii) analyses provided by defense counsel, medical experts or other information which comes to light during discovery; (iii) the legal fees and other expenses anticipated to be incurred in defending the actions; (iv) the status and likely success of any mediation or settlement discussions, including estimated settlement amounts and legal fees and other expenses anticipated to be incurred in such settlement, as applicable; and (v) the venues in which the actions have been filed or will be adjudicated. The Company believes that most of the professional and general liability actions are defensible and intends to defend them through final judgment unless settlement is more advantageous to the Company. Accordingly, the self-insurance reserve reflects the Company’s estimate of settlement amounts for the pending actions, if applicable, and legal costs of settling or litigating the pending actions, as applicable. Because the self-insurance reserve is based on estimates, the amount of the self-insurance reserve may not be sufficient to cover the settlement amounts actually incurred in settling the pending actions, or the legal costs actually incurred in settling or litigating the pending actions. See Note 8 –Accrued Expenses and Note 13 -Commitments and Contingencies to our audited consolidated financial statements in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report.
Previous wording
As required by ASC Topic 740, “Income Taxes”, we established deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities at tax rates in effect when such temporary differences are expected to reverse. When necessary, we record a valuation allowance to reduce our net deferred tax assets to the amount that is more likely than not to be realized. At December 31, 2023, the Company has a valuation allowance of approximately $20.7 million. In future periods, we will continue to assess the need for and adequacy of the remaining valuation allowance. ASC 740 provides information and procedures for financial statement recognition and measurement of tax positions taken, or expected to be taken, in tax returns.
Current wording
As required by ASC Topic 740, “Income Taxes”, we established deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities at tax rates in effect when such temporary differences are expected to reverse. When necessary, we record a valuation allowance to reduce our net deferred tax assets to the amount that is more likely than not to be realized. At December 31, 2024, the Company has a valuation allowance of approximately $21.2 million. In future periods, we will continue to assess the need for and adequacy of the remaining valuation allowance. ASC 740 provides information and procedures for financial statement recognition and measurement of tax positions taken, or expected to be taken, in tax returns.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Net cash used in financing activities for the year ended December 31, 2024 was approximately $2.2 million, consisting of routine repayments totaling $1.4 million towards our senior debt obligations and other debt payments of $1.2, offset by other debt proceeds of $0.4.
Current report — wording carried from elsewhere
Net cash provided by operating activitiesfor the year ended December 31, 2023 was approximately $3.7 million, consisting primarily of non-cash expenses and changes in our working capital accounts totaling $7.8 million offset by our net loss of approximately $4.0 million.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Costs associated with these efforts have been expensed as incurred in “Other expense, net” and were $0.9 million and approximately $1.3 million for the years ended December 31, 2023 and December 31, 2022, respectively.
Previous report — wording carried elsewhere
Net cash used in financing activities for the year ended December 31, 2022 is the result of routine repayments totaling $1.6 million towards our senior debt obligations, $0.1 million repayment of the City of Springfield, Ohio First Mortgage Revenue Series 2012 B Bonds, and approximately $1.0 million toward our professional and general liability insurance and our directors’ and officers’ insurance.