REGIONAL HEALTH PROPERTIES INC
For the period ended Jun 30, 2025. Filed Aug 14, 2025.
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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, 2025 · Filed Aug 14, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0000950170-25-072625
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-14.
0000950170-25-108917
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 64 previous paragraphs and 83 current paragraphs.
38 unchanged; 24 reworded; 19 added; 2 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 8 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 (19)
Current report
Overview
Current report
Represents the number of facilities operated under third-party management agreements.
Current report
Rental revenues—Rental revenue for our Real Estate Services segment decrease by approximately $0.5 million to $1.3 million for the three months ended June 30, 2025, compared with $1.8 million for the same period in 2024. The 28.7% decrease is due to the transition of the Georgetown, Mountain Trace, Southland, and Sumter facilities to the Healthcare Services segment.
Current report
General and administrative expenses—General and administrative expenses were $2.4 million for the three months ended June 30, 2025, compared with $1.2 million for the same period in 2024. The 123.7% increase is primarily due to the transition of the operations of the Georgetown, Mountain Trace, Southland and Sumter facilities back to the Company and an increase spent in investor relations.
Current report
Six Months Ended June 30, 2025 and 2024
Current report
Patient care revenues—Patient care revenues for the Healthcare Services segment, as a result of the Company operating the Georgetown, Mountain Trace, Southland, and Sumter facilities, were $14.4 million for the six months ended June 30, 2025, compared with $4.8 million for the same period in 2024. The 198.3% increase is primarily due to the transition of the additional facilities to the Healthcare Services segment.
Current report
Patient care expense—Patient care expense was $11.6 million for the six months ended June 30, 2025, compared with $4.3 million for the same period in 2024. The 170.5% increase is primarily due to the transition of the Mountain Trace, Georgetown, Southland, and Sumter facilities to the Healthcare Services segment.
Current report
Facility rent expense—Facility rent slightly increased year over year with $0.4 million for the six months ended June 30, 2025, compared with $0.3 million for the same period in 2024.
Current report
Credit loss expense—Credit loss expense of $0.5 million primarily represents reserves taken against rent receivable for Georgetown, Sumter, Coosa Valley, and Autumn Breeze facilities for the six months ended June 30, 2025 compared with $0.1 million in 2024.
Current report
Overview
Current report
On January 6, 2025, Regional and SunLink announced the execution of an Agreement and Plan of Merger dated January 3, 2025, under which SunLink would merge with and into Regional. In exchange, SunLink shareholders would receive 1,410,000 shares of Regional common stock and 1,410,000 shares of newly authorized Series D 8% Cumulative Convertible Redeemable Preferred Stock, with an initial $10.00 per share liquidation preference.
Current report
Subsequently, on April 14, 2025, the companies entered into an Amended and Restated Agreement and Plan of Merger. Among other changes, the revised agreement increased the common stock consideration to 1.1330 shares of Regional common stock per SunLink share, raised the Series D Preferred Stock liquidation preference to $12.50 per share, and improved the conversion ratio to 1.1330 shares of Regional common stock for every three shares of Series D Preferred Stock, subject to further potential reduction. The revised agreement also permitted SunLink to pay one or two special cash dividends to its shareholders before closing, subject to specified limitations. The merger agreement has been approved by both companies’ boards of directors and remains subject to shareholder approvals, regulatory clearance, and other customary closing conditions.
Current report
On June 22, 2025, Regional and SunLink amended the merger agreement to extend the outside termination date to 5:00 p.m. Eastern Time on August 11, 2025. Under the amended agreement, either party may terminate the transaction if the merger is not completed by the revised termination date.
Current report
While the Company continues to move toward closing the merger, it has also received and evaluated unsolicited acquisition proposals. On May 6, 2025, Regional received an unsolicited proposal from “Party A” to acquire substantially all of its assets. The proposed consideration included assumption of certain HUD-insured mortgage loans, payment of the remaining mortgage debt (up to a $51 million cap), and $4.00 per share for outstanding common stock. Pursuant to the merger agreement, Regional promptly notified SunLink and, after careful review with legal counsel, the Board of Directors determined on June 20, 2025, that the proposal did not constitute a “Superior Regional Proposal.”
Current report
A second unsolicited proposal was received on June 23, 2025, from “Party B,” who expressed interest in launching a tender offer to purchase up to 100% of Regional’s common stock at $4.25 per share. The Company again notified SunLink and, following legal review, the Board concluded on July 10, 2025, that this offer also did not represent a Superior Regional Proposal under the terms of the merger agreement.
Current report
Separately, the Company experienced changes in its listing status. Until February 5, 2025, Regional’s common stock and Series A Preferred Stock were listed on the NYSE American under the ticker symbols “RHE” and “RHE-PA,” respectively. Trading was suspended on that date due to noncompliance with listing standards. On June 11, 2025, the NYSE American formally delisted both securities. They now trade on the OTC Markets under the symbols “RHEP” (common stock) and “RHEPA” (Series A Preferred Stock).
Current report
Trading on the OTC Markets presents challenges, including reduced liquidity, wider bid-ask spreads, and limited analyst coverage. In addition, broker-dealers face greater regulatory burdens, which may further discourage trading activity. These limitations could depress trading prices and negatively impact the Company’s ability to raise capital through equity or debt offerings. Such constraints may impair the Company’s ability to invest in future growth or refinance upcoming debt maturities.
Current report
Six Months Ended June 30, 2025
Current report
Six Months Ended June 30, 2024
Removed paragraphs (2)
Previous report
Three Months Ended March 31, 2025
Previous report
Three Months Ended March 31, 2024
Reworded paragraphs (24)
Previous wording
As of March 31, 2025, we had investments of approximately $67.2 million in eleven health care real estate facilities and one leased facility. We currently own twelve properties, consisting of nine skilled nursing facilities and two multi-service facilities (of which one multi-service campus contains two co-located properties) Six facilities are pursuant to triple-net leases and six facilities are managed by two external managers. The Company has one leased facility that is subleased pursuant to a triple-net lease.
Current wording
As of June 30, 2025, we had investments of approximately $67.9 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(of which one multi-service campus contains two co-located properties). Seven facilities are pursuant to triple-net leases and six facilities are managed by two external managers. The Company has one leased facility that is subleased pursuant to a triple-net lease.
Previous wording
The following table provides summary information regarding the number of facilities and related licensed beds/units by operator/manager affiliation as of March 31, 2025:
Current wording
The following table provides summary information regarding the number of facilities and related licensed beds/units by operator affiliation as of June 30, 2025:
Previous wording
Patient care revenues—Patient care revenues for the Healthcare Services segment, as a result of the Company operating the Meadowood, Glenvue, Mountain Trace, Sumter, and Georgetown facilities, were $5.6 million for the three months ended March 31, 2025, compared to $2.3 million for the same period in 2024. The 144.3% increase is due to the transition of the Mountain Trace, Georgetown, and Sumter facilities to the Healthcare Services segment.
Current wording
Patient care revenues—Patient care revenues for the Healthcare Services segment, as a result of the Company operating the Georgetown, Mountain Trace, Southland, and Sumter, facilities, were $8.8 million for the three months ended June 30, 2025, compared with $2.5 million for the same period in 2024. The 247.5% increase is primarily due to the transition of the Georgetown, Mountain Trace, Southland and Sumter facilities to the Healthcare Services segment.
Previous wording
Patient care expense—Patient care expense was $4.4 million for the three months ended March 31, 2025 compared with $2.1 million for the same period in 2024. The current period expense increase of $2.3 million was primarily due to the transition of the Mountain Trace, Georgetown, and Sumter facilities to the Healthcare Services segment.
Current wording
Patient care expense—Patient care expense was $7.2 million for the three months ended June 30, 2025 compared with $2.2 million for the same period in 2024. The current period expense increase of $5.0 million is primarily due to the transition of the Georgetown, Mountain Trace, Southland, and Sumter facilities to the Healthcare Services segment.
Previous wording
Facility rent expense—Facility rent was $0.2 million for the three months ended March 31, 2025, which was the same amount for the three months ended March 31, 2024.
Current wording
Facility rent expense—Facility rent was $0.1 million for the three months ended June 30, 2025, compared with $0.1 million for the same period in 2024.
Previous wording
Depreciation and amortization—Depreciation and amortization was $0.4 million for the three months ended March 31, 2025, compared to $0.5 million for the same period in 2024. The decrease is primarily due to the reduction in depreciation from fully depreciated equipment and computer related assets in the current year and suspending depreciation expense on our assets held for sale.
Current wording
Depreciation and amortization—Depreciation and amortization was $0.4 million for the three months ended June 30, 2025, compared with $0.5 million for the same period in 2024. The 21.6% decrease is primarily due to the reduction in depreciation from fully depreciated equipment and computer related assets in the current year and suspending depreciation expense on our assets held for sale.
Previous wording
Credit loss expenses—Credit loss expense primarily represents reserves taken against patient Accounts Receivable for the three months ended March 31, 2025 and for the same period in 2024.
Current wording
Credit loss expense—Credit loss expense primarily represents reserves taken against patient Accounts Receivable as well as rent receivable at the Coosa Valley facility for the three months ended June 30, 2025 and for the same period in 2024.
Previous wording
Rental revenues—Rental revenue for our Real Estate Services segment decreased by approximately $0.3 million to $1.5 million for the three months ended March 31, 2025, compared with $1.8 million for the same period in 2024. The 14.9% decrease is primarily due to transition of the Mountain Trace facility to our Healthcare Services segment.
Current wording
Rental revenues—Rental revenue for our Real Estate Services segment decreased by approximately $0.8 million to $2.8 million for the six months ended June 30, 2025, compared with $3.6 million for the same period in 2024. The 21.7% decrease is primarily due to transition of the Georgetown, Mountain Trace, Southland and Sumter facilities to our Healthcare Services segment.
Previous wording
General and administrative expenses—General and administrative expenses were $2.2 million for the three months ended March 31, 2025 compared with $1.6 million for the same period in 2024. The difference is due to the transition of the Mountain Trace, Georgetown, and Sumter facilities to the Healthcare Services segment.
Current wording
General and administrative expenses—General and administrative expenses were $4.7 million for the six months ended June 30, 2025, compared with $2.9 million for the same period in 2024. The 74.1% increase is primarily due to the transition of the Georgetown, Mountain Trace, Southland, and Sumter facilities to the Healthcare Services segment.
Previous wording
Loss on Lease Termination-Expenses related to the termination of the two leases to Oak Hollow Healthcare Management were $0.3 million for the three months ended March 31, 2025. The losses consist of the writeoff of straight-line rent.
Current wording
Loss on Lease Termination-Expenses related to the termination of the two leases to Oak Hollow Healthcare Management were $0.3 million for the six months ended June 30, 2025. The losses consist of the writeoffs of straight-line rent.
Previous wording
Gain on exchange of assets—The gain on exchange of assets were $0.1 million for the three months ended March 31, 2025. The Company took patient Accounts Receivable in leu of the outstanding Rent Receivable owed by Oak Hollow Healthcare Management as part of the lease termination.
Current wording
Gain on operations transfer—The gain on exchange of assets were $0.1 million for the six months ended June 30, 2025. The Company took patient Accounts Receivable in lieu of the outstanding Rent Receivable owed by Oak Hollow Healthcare Management as part of the lease termination.
Previous wording
The following table summarizes the Company's non-GAAP financial measure of results based on EBITDA for the quarters ending March 31, 2025 and 2024. 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 wording
The following table summarizes the Company's non GAAP financial measure of results based on EBITDA for the three and six months ended June 30, 2025 and 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.
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
Overview. 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;(v) reducing other and general and administrative expenses and (vi) executing the proposed merger with SunLink Health Systems, Inc. (as noted below).
Previous 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 March 31, 2025, the Company had $0.5 million in unrestricted cash and 3.6 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 certain assets held for sale (See Note 5 -Assets Held for Saleto the consolidated financial statements included in Part I, Item 1 herein) to increase cash available for operations and future investments. At June 30, 2025, the Company had $0.4 million in unrestricted cash and 4.4 million of net accounts receivable, mainly consisting of patient accounts receivable and rent receivables.
Previous wording
During the three months ended March 31, 2025, the Company's net cash provided by operating activities was $0.2 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, 2025, the Company's net cash provided by operating activities was $0.8 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, 2025, Regional recorded an estimated allowance of $0.1 million against a gross accounts receivable of $3.8 million.
Current wording
As of June 30, 2025, Regional recorded an estimated allowance of $0.5 million against a gross accounts receivable of $4.8 million.
Previous wording
As of March 31, 2025, the Company had $49.2 million in indebtedness, net of $1.0 million deferred financing, and unamortized discounts. The Company anticipates net principal repayments of approximately $6.8 million during the next twelve-month period, approximately $2.6 million of routine debt service amortization, $0.2 million payment of bond debt, and $4.0 million of Southland's maturing debt.
Current wording
As of June 30, 2025, the Company had $48.9 million in indebtedness, net of $1.0 million deferred financing, and unamortized discounts. The Company anticipates net principal repayments of approximately $3.3 million during the next twelve-month period, approximately $2.7 million of routine debt service amortization, $0.4 million of insurance financing amortization, and a $0.2 million payment of bond debt.
Previous wording
Net cash provided by operating activities—was approximately $0.2 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 $0.8 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 $65.0 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 $0.6 million. The cash was used to make routine payments totaling $0.4 million for our Senior debt obligations, $0.2 million for other debt.
Current wording
Net cash used in financing activities—was approximately $0.7 million. The cash was used to make routine payments totaling $0.8 million for our senior debt obligations, $0.6 million for other debt.
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 $0.8 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 $1.3 million. The cash was used to make routine payments totaling
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 (2)
Current report — wording carried from elsewhere
Depreciation and amortization—Depreciation and amortization was $0.8 million for the six months ended June 30, 2025, compared with $1.0 million for the same period in 2024. The 21.5% decrease is primarily due to the reduction in depreciation from fully depreciated equipment and computer related assets in the current year and suspending depreciation expense on our assets held for sale.
Current report — wording carried from elsewhere
$0.7 million for our senior debt obligations, $0.6 million for other debt.