REGIONAL HEALTH PROPERTIES, INC

September 30, 2025

NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Regional Health Properties, Inc.'s (the "Company" or "Regional Health") predecessor was incorporated in Ohio on August 14, 1991, under the name Passport Retirement, Inc. In 1995, Passport Retirement, Inc. acquired substantially all of the assets and liabilities of AdCare Health Systems, Inc. and changed its name to AdCare Health Systems, Inc. ("AdCare"). AdCare completed its initial public offering in November 2006, relocated its executive offices and accounting operations to Georgia in 2012, and changed its state of incorporation from Ohio to Georgia in December 2013. Regional Health Properties, Inc. is a self-managed real estate investment company that invests primarily in real estate purposed for long-term care and senior housing andone pharmacy services business. The Company's business primarily consists of operatingsix facilities with a manager affiliate, leasing five facilities to third-party tenants, which operate the facilities and pharmacy services business. The Company hasthree primary reporting segments: (i) Real Estate, which consists of the leasing and subleasing of long-term care and senior living facilities to third-party tenants. (ii) Healthcare Services segment, which consists of the operation of the Georgetown, Glenvue, Meadowood Mountain Trace, Southland and Sumter facilities and (iii) Pharmacy Service Segment, which consists of four operational areas, retail pharmacy products and services, institutional pharmacy services, which consists of specialty and non-specialty pharmaceutical and products to institutional clients or to patients in institutional settings, non-institutional pharmacy services consisting of the provision specialty and non-specialty pharmacy and biological products to clients or patients in non-institutional settings including private residential homes and durable medical equipment, consisting primarily of the sale and rental products for institutional clients or to patients and institutional settings and patient-administered homecare. Effective August 3, 2023, the Company’s 12.5% Series B Cumulative Redeemable Preferred Shares (the “Series B Preferred Stock”) is quoted on the OTC Markets Group, Inc.’s OTCQB Venture Market under the symbol “RHEPB”. Effective June 11, 2025, the Company's Common Stock and the Series A Redeemable Preferred Stock ("Series A Preferred Stock") trade on the OTCQB under the symbols “RHEP” and “RHEPA,” respectively.

As announced on August 14, 2025, the Company completed its previously announced merger with SunLink Health Systems, Inc. (“SunLink”), a Georgia corporation, pursuant to that certain Amended and Restated Agreement and Plan of Merger, dated as of April 14, 2025, by and between the Company and SunLink (the “Original Merger Agreement”), as amended by that certain Amendment to Amended and Restated Agreement and Plan of Merger, dated as of June 22, 2025, by and between the Company and SunLink (the “Merger Agreement Amendment”) (the Original Merger Agreement, as amended by the Merger Agreement Amendment, the “Merger Agreement”). Pursuant to the Merger Agreement, on the Closing Date, SunLink merged with and into the Company, with the Company continuing as the surviving corporation (the “merger”). See Note 3 -Business Combination.

Basis of Presentation

The accompanying consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles ("GAAP") in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC"). The accompanying consolidated financial statements are unaudited and should be read in conjunction with the 2024 audited consolidated financial statements and notes thereto, which are included in our 2024 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission ("SEC") on March 31, 2025 ("Annual Report").

In the opinion of management, the unaudited consolidated financial statements for the interim periods presented include all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the Company's financial position and the results of its operations and cash flows for such periods presented. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

Reclassifications

Certain prior period amounts have been reclassified to conform with the current period presentation format. These reclassifications had no effect on previously reported results of operations, total assets, total liabilities, or stockholders’ deficit.

Principles of Consolidations

The consolidated financial statements include the Company's majority owned and controlled subsidiaries. All intercompany transactions and balances have been eliminated through consolidation.

Revenue Recognition and Allowances

Patient Care Revenue. ASU 2014-09, Revenue from Contracts with Customers, as codified in ASC 606 ("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 six facilities we operate. The Company receives payments from the following sources for services rendered in our facilities: (i) the federal government under the Medicare program administered by the U.S. Department of Health and Human Services Centers for Medicare and Medicaid Services ("CMS"); (ii) state governments under their respective Medicaid and similar programs; (iii) commercial insurers; and (iv) individual patients and clients. The vast majority of the revenue the Health Services segment recognizes 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 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 operating revenues.

Triple-Net Leased Properties. The Company recognizes rental revenue of the Rental Estate Services segment in accordance with ASC 842, Leases. 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. 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 the 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 2 –Liquidity and Note 8 – Leases.

Pharmacy Services Revenue. The Company recognizes revenue of the Pharmacy Services segment from providing pharmacy goods and services to patients and is recognized on the date the goods and services are provided to at amounts billable to individual patients, adjusted for estimates for variable consideration. Revenue is recognized when control of the promised goods or services are transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Each prescription claim represents a separate performance obligation of the Company, separate and distinct from other prescription claims under customer arrangements. Significant portions of the revenue from sales of pharmaceutical and medical products are reimbursed by the federal Medicare Part D program and, to a lesser extent, state Medicaid programs. The Company monitors its revenues and receivables from these reimbursement sources, as well as other third-party insurance payors, and reduces revenue at the revenue recognition date, to properly account for the variable consideration due to anticipated differences between billed and reimbursed amounts. Accordingly, the total net revenues and receivables reported in the Company’s consolidated financial statements of the Pharmacy Services Segment are recorded at the amount expected to be ultimately received from these payors.

Allowances. The Company assesses the collectability of its rent receivables, including straight-line rent receivables and working capital loans to tenants. The Company bases its assessment of the collectability of rent receivables and working capital loans to tenants on several factors, including payment history, the financial strength of the tenant and any guarantors, the value of the underlying collateral, and current economic conditions. If the Company’s evaluation of these factors indicates it is probable that the Company will be unable to receive the rent payments or payments on a working capital loan, then the

Company provides a reserve against the recognized straight-line rent receivable asset or working capital loan for the portion that we estimate may not be recovered. Payments received on impaired loans are applied against the allowance. If the Company changes its assumptions or estimates regarding the collectability of future rent payments required by a lease or required from a working capital loan to a tenant, then the Company may adjust its reserve to increase or reduce the rental revenue or interest revenue from working capital loans to tenants recognized in the period the Company makes such change in its assumptions or estimates. See Note 7 –Leases. The Company has reserved for approximately 1.5% of our patient care receivables based on the historic industry standards and continues to assess the adequacy of such reserve.

Activity in the allowance for credit losses in the Real Estate segment for the nine months ended September 30, 2025 and September 30, 2024 included the following:

Activity in the allowance for credit losses in the Healthcare segment for the nine months ended September 30, 2025 and September 30, 2024 included the following:

Activity in the allowance for credit losses in the Pharmacy segment for the nine months ended September 30, 2025 included the following:

As of September 30, 2025 and December 31, 2024, the Company reserved for approximately$0.9 million and$0.1 million, respectively, of uncollected receivables. Accounts receivable, net of allowance, totaled$7.7 million at September 30, 2025 and$3.4 million at December 31, 2024.

The following table presents the Company's Accounts receivable, net of allowance for the periods presented:

Assets Held for Sale and Discontinued Operations

The Company may decide to sell properties that are held for use. The Company records these properties as assets held for sale when management has committed to a plan to sell the assets, actively seeks a buyer for the assets, and the consummation of the sale is considered probable and is expected within one year. Assets classified as held for sale are reported at the lower of their carrying value or their fair value, less estimated costs to sell. When the carrying value exceeds the fair value, less estimated costs to sell, an impairment expense is recognized. The Company estimates fair value, less estimated closing costs, based on similar real estate sales transactions. These valuation assumptions are based on the three-level valuation hierarchy for fair value measurement and represent Level 2 and 3 inputs. Level 2 inputs are quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets in markets that are not active; and inputs other than quoted prices. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. See Note 6 -Assets Held for Sale for additional details on assets held for sale as of September 30, 2025 and December 31, 2024. Any debt related to assets held for sale or sold during the period are classified as debt related to assets held for sale for the current and prior periods presented in the accompanying consolidated financial statements.

Assets held for sale are presented as discontinued operations in all periods presented if the disposition represents a strategic shift that has, or will have, a major effect on the Company's financial position or results of operations. This includes the net gain (or loss) upon disposal of property held for sale, the property's operating results, depreciation and interest expense.

Prepaid Expenses and Other

As of September 30, 2025 and December 31, 2024, the Company had approximately$1.8 million and$0.6 million, respectively, in prepaid expenses and other; the $1.2 million change is mainly related to the addition of SunLink's prepaid amounts for insurance.

Inventory

As of September 30, 2025, the Company had approximately $1.4 million in inventory of the Pharmacy Services segment. Inventory consists of pharmacy supplies, which are stated at the lower of cost (standard cost method), or net realizable value. Use of this method does not result in a material difference from the methods required by GAAP.

Accounts Payable

The following table presents the Company's Accounts payable for the periods presented:

The attribution of the $4.2 million accounts payable increase from December 31, 2024 to September 30, 2025 is primarily rooted in the addition of operations of Sumter, Georgetown, Southland, and Mt. Trace. The rest of the increase is mainly due to the consolidation of the Pharmacy segment that resulted from the merger with SunLink.

Leases and Leasehold Improvements

The Company leases certain facilities and equipment in the normal course of business. At the inception of each lease, the Company performs an evaluation to determine whether the lease should be classified as an operating lease or finance lease. As of September 30, 2025, all of the Company's leased facilities are accounted for as operating leases. For operating leases that contain scheduled rent increases, the Company records rent expense on a straight-line basis over the term of the lease. Leasehold improvements are amortized over the shorter of the useful life of the asset or the lease term.

The Company recognizes both right of use assets and lease liabilities for leases in which we lease land, real property, or other equipment. We assess any new contracts or modification of contracts in accordance with ASC 842, Leasesto determine the existence of a lease and its classification.

We report revenues and expenses for real estate taxes and insurance where the lessee has not made those payments directly to a third-party in accordance with its respective leases with us. Additionally, we expense certain leasing costs, other than leasing commissions, as they are incurred. The present value of minimum lease payments was calculated on each lease, using a discount rate that approximated our incremental borrowing rate and the current lease term. See Note 6–Leases for more information on the Company's operating leases.

Insurance

The Company maintains insurance for professional and general liability claims for its Healthcare Services segment, which includes any facility 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 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 9 –Accrued Expenses and Note 13 -Commitments and Contingencies.

In addition, the Company maintains certain other insurance programs, including commercial general liability, property, casualty, directors’ and officers’ liability, crime, and employment practices liability.

Other Expense, net

For the three and nine months ended September 30, 2025 other expenses represents costs incurred in connection with the Merger. See Note 3 –Business Combination.

Net Income (Loss) Per Share

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the respective period. Diluted earnings per share is similar to basic net loss per share except that the net loss is adjusted by the impact of the weighted-average number of shares of common stock outstanding including potentially dilutive securities (such as options, warrants and non-vested common stock) when such securities are not anti-dilutive. Potentially dilutive securities from options, warrants and unvested restricted shares are calculated in accordance with the treasury stock method, which assumes that proceeds from the exercise of all options and warrants with exercise prices exceeding the average market value are used to repurchase common stock at market value. The incremental shares remaining after the proceeds are exhausted represent the potentially dilutive effect of the securities.

Securities outstanding that were excluded from the computation, because they would have been anti-dilutive were as follows:

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public company to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. A public company with a single reportable segment is required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption of ASU 2023-07 did not have a material impact on the Company's consolidated financial statements. See Note 13 –Segment Results for more information.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures,

which requires a public company, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 effective January 1, 2025. The adoption of ASU-2023-09 did not have a material impact on the Company's consolidated financial statements.

New Accounting Pronouncements Issued But Not Yet Effective

In November 2024, the FASB issued ASU 2024-03, Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses(ASU 2024-03), which requires disclosure of incremental income statement expense information on an annual and interim basis, primarily through enhanced disclosures of specified costs and expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that ASU 2024-03 will have on its consolidated financial statement disclosures.

No other new accounting pronouncement issued or effective has had, or is expected to have, a material impact on the Company's financial statements.

NOTE 2. LIQUIDITY

The Company continues to take strategic steps to strengthen its liquidity position and support long-term growth. These initiatives include refinancing or repaying existing debt to reduce interest expense and mandatory principal payments—potentially through expanded borrowing arrangements—alongside efforts to increase lease revenue through acquisitions and reinvestments in existing properties. The Company is also working to restructure lease terms with certain tenants, replace non-performing tenants, reduce general and administrative expenses, and completed its merger with SunLink which provided $6.0 million of acquired unrestricted cash. See Note 3 -Business Combination.

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).

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.

During the nine months ended September 30, 2025, the Company used$1.0 million in cash from operating activities, largely due to timing differences in accounts payable and accrued expense payments. Management is actively working to accelerate the collection of aged patient receivables. Future operating cash flows will depend on the financial performance of the Company’s leased facilities, facilities managed by CJM Advisors, including Georgetown, Glenvue, Mountain Trace, Southland, and Sumter and the Pharmacy Services business.

As of September 30, 2025, the Company held approximately$1.0 million in unrestricted cash and$7.7 million in net accounts receivable, primarily comprised of Health Care Services and Pharmacy business patient accounts and rent receivables. Regional has committed to a plan to sell specific assets classified as held for sale to generate additional liquidity in support of operations and potential investment opportunities. See Note 6 -Assets Held for Sale.

Debt

As of September 30, 2025, the Company had$48.6 million in indebtedness, net of$0.9 million deferred financing costs and unamortized discounts. The Company anticipates net principal repayments of approximately$3.0 million during the next twelve-month period, approximately$2.2 million of routine debt service amortization,$0.6 million of insurance financing amortization, and$0.2 million payment of bond debt.

As of September 30, 2025, the Company was in compliance with the various financial and administrative covenants under all the Company's outstanding credit related instruments.

Evaluation of the Company's Ability to Continue as a Going Concern

Under the accounting guidance related to the presentation of financial statements, the Company is required to evaluate, on a quarterly basis, whether or not the Company's current financial condition, including its sources of liquidity at the date that the consolidated financial statements are issued, will enable the Company to meet its obligations as they come due arising within one year of the date of the issuance of the Company's consolidated financial statements and to make a determination as to whether or not it is probable, under the application of this accounting guidance, that the Company will be able to continue as a going concern. The Company's consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

In applying applicable accounting guidance, management considered the Company's current financial condition and liquidity sources, including current funds available, forecasted future cash flows, the Company's obligations due over the next twelve months, and the Company's recurring business operating expenses.

NOTE 3. BUSINESS COMBINATION

(Amounts in 000s)

Effective August 14, 2025, the Company closed on the merger with SunLink; whereas, SunLink merged with and into the Company, and the Company continuing as the surviving corporation. The primary reason for the combination was the combination of the Company and SunLink would result in the potential for a material and immediate and long-term upside to both company's current shareholders' valuation. The two companies had complimentary business lines and long-term experience of senior management provided a complimentary merger resulting in multiple business synergies.

On August 5, 2025, the Company filed Articles of Amendment (the “Articles of Amendment”) to its Amended and Restated Articles of Incorporation with the Secretary of State of the State of Georgia to establishits Series D 8% Cumulative Convertible Redeemable Participating Preferred Shares, no par value per share (the “Series D Preferred Stock”).

Pursuant to the Merger Agreement, at the effective time of the merger (the “Effective Time”), each five shares of common stock, no par value per share, of SunLink (“SunLink common stock”) issued and outstanding immediately prior to the Effective Time (other than excluded shares (as defined in the Merger Agreement)) were converted into the right to receive (i)1.1330 validly issued, fully paid and nonassessable shares of the Company's common stock, and (ii) one validly issued, fully paid and nonassessable share of Series D Preferred Stock, no par value per share. Holders of SunLink common stock will receive cash (without interest) in lieu of fractional shares of the Company's common stock or Series D preferred stock in accordance with the terms of the Merger Agreement. The total aggregate consideration paid in the merger was 1,595,400 shares of the Company's common stock and 1,408,121 shares of Regional Series D preferred stock.

Accounting for the Merger

The merger is accounted for as a business combination pursuant to Accounting Standards Codification Topic 805, (“ASC 805”), where the Company, the legal acquiree, is determined to be the accounting acquirer of SunLink. After the closing of the merger transaction, SunLink ceased to exist.

The assets and liabilities of SunLink on the closing date were consolidated into the Company at their respective fair values, and the shortfall of the purchase price consideration over the fair value of SunLink’s net assets was recognized as a gain on bargain purchase. Fair value is defined in Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company’s preliminary purchase price allocation was based on an evaluation of the appropriate fair values and represents management’s best estimate based on available data. Any changes within the measurement period resulting from facts and circumstances that existed as of the acquisition date may result in retrospective adjustments to the provisional amounts recorded at the acquisition date. The Company employed a third-party valuation firm to assist in determining the purchase price allocation of assets and liabilities acquired from SunLink.

A combination of the income, cost, and market approaches were used to determine the value of property and equipment, trademarks and trade name, client relationships, and Medicare license, as applicable. The income approach determines the fair value for an asset based on the present value of cash flows projected to be generated by the asset. Projected cash flows are discounted at a rate of return that reflects the relative risk of achieving the cash flow and the time value of money. Projected cash flows for each asset considered multiple factors, including current Fair Measurements and Disclosure. The cost approach utilizes assumptions for the cost to replace, timing, and resources required, as well as profit margin and opportunity costs. The market approach seeks to determine the current value of an asset by reference to recent comparable transactions involving the sale of similar assets. Adjustments may need to be made to those recorded transactions in order to account for any significant differences between the assets being valued. As of September 30, 2025, the calculation and allocation of the purchase price to tangible and intangible assets and liabilities is preliminary, as the Company is still in the process of accumulating all of the required information to finalize the opening balance sheet and calculations of intangible assets.

Purchase Price Allocation

The unaudited consolidated financial information reflects a gain on bargain purchase because the estimated fair value of the identifiable net assets acquired exceeds the estimated purchase price consideration.

At the merger,1,595,400 Shares of Regional Health common stock and 1,408,121 Regional Series D preferred stock were issued. The Regional Health common stock at the merger was valued at the closing trading on the closing date. The new Regional Health Series D preferred stock was valued by an independent valuation firm. The total value of the Regional equity exchanged for the SunLink shares, was as follows:

1,595,400 Regional common shares @$1.98 per share $3,159

1,408,121 Regional preferred Series D 4,691

Total consideration transferred to SunLink holders$7,850

A bargain purchase of $5,311 was recognized for the merger because the fair value of identifiable net assets exceeded the purchase price consideration. A summary of the fair value consideration transferred for the Merger and the preliminary allocation to the fair value of the assets and liabilities of SunLink follows:

Acquisition-related costs (included in other expense in Regional's Consolidated Statements of Operations) were $584 and $1,201 for the three and nine months periods ended September 30, 2025, respectively.

The amounts of SunLink’s revenues and net income (loss) included in Regional Health’s Consolidated Statements of Operations for the three months ended September 30, 2025, and the revenue and net income (loss) of the combined entity had the acquisition date been January 1, 2024 are:

(1) The unaudited pro forma net income for the three and nine months ended September 30, 2025 excludes a nonrecurring pro forma adjustment directly attributable to the SunLink merger, consisting of a bargain purchase gain of $5,311.

Defined Benefit Pension Plan

SunLink retained a defined benefit retirement plan which covered substantially all the employees of a business when the business was sold in 1998. Effective February 28, 1997, the plan was amended to freeze participant benefits and closed the plan to new participants. Pension expense and related tax benefit or expense is reflected in the Consolidated Statements of Operations.

The components of pension expense for the post-merger three and nine months ended September 30, 2025, respectively, were as follows:

NOTE 4. CASH AND RESTRICTED CASH

The following presents the Company's cash and restricted cash:

Cash collateral—In securing mortgage financing from certain lending institutions, the Company and certain of its wholly-owned subsidiaries are required to deposit cash to be held as collateral in accordance with the terms of such loan agreements.

HUD and other replacement reserves—The regulatory agreements entered into in connection with the financing secured through HUD require monthly escrow deposits for replacement and improvement of the HUD project assets.

Escrow deposits—In connection with financing secured through the Company's lenders, several wholly-owned subsidiaries of the Company are required to make monthly escrow deposits for taxes and insurance.

Restricted cash for debt obligations—In compliance with certain financing and insurance agreements, the Company and certain wholly-owned subsidiaries of the Company are required to deposit cash held as collateral by the lender or in escrow with certain designated financial institutions.

NOTE 5. PROPERTY AND EQUIPMENT

The following table sets forth the Company's property and equipment:

(1)

Includes$0.1 million of land improvements with an average estimated useful remaining life of approximately 4.5 years.

The following table summarizes total depreciation and amortization expense three and nine months ended September 30, 2025 and 2024:

NOTE 6. ASSETS HELD FOR SALE

Assets held for sale represent our Coosa and Meadowood facilities. The following table sets forth the Company's asset held for sale:

On July 30, 2025, the Company, Coosa Nursing ADK LLC, a wholly-owned subsidiary of the Company (“Coosa”), and Coosa Valley SNF Realty LLC (the “Purchaser”) entered into a binding asset purchase agreement (the “APA”), whereby Coosa would sell Coosa Valley Health and Rehab (the “Coosa Facility”) to the Purchaser, subject to a 45-day due diligence window in favor of the Purchaser. Under the terms contemplated by the APA, the Purchaser would acquire the Coosa Facility for a purchase price of$10.6 million. On November 6, 2025, the Coosa Facility sale was completed. See Note 15 –Subsequent Events for additional disclosure of the Coosa Facility sale.

NOTE 7. INTANGIBLE ASSETS AND GOODWILL

Intangible assets and Goodwill consist of the following:

(1)

Non-separable bed licenses are included in property and equipment as is the related accumulated amortization expense (see Note 4 –Property and Equipment).

(2)

The Company does not amortize indefinite-lived intangibles, which consist of separable bed licenses and goodwill.

The following table summarizes amortization expense for thethree and nine months ended September 30, 2025 and 2024:

Expected amortization expense for the years ending December 31, for all definite-lived intangibles, for each of the next five years and thereafter is as follows:

NOTE 8. LEASES

Facility and Office Lessee

As of September 30, 2025 and December 31, 2024, the Company leases one Skilled Nursing Facility ("SNF") in Covington, Ohio under a non-cancelable lease, which has rent escalation clauses and provisions for payments of real estate taxes, insurance, and maintenance costs. The remaining lease term for the Covington facility is approximately 3.6 years as of September 30, 2025. The Company subleases the Covington facility to a third party. The Pharmacy Segment business assets at the merger included $593,000 of Right of Use assets, consisting primarily of four non-cancellable property leases with expiration dates ranging from May 2026 to December 2030 and office equipment leases.

Effective July 1, 2023, the Company signed a sublease for 2,000 sq ft of office space in Atlanta, Georgia. The sublease expired on July 31, 2025. On July 30, 2025, the Company entered into a two year lease with the landlord which the lease commenced August 1, 2025 and will expire on July 31, 2027.

As of September 30, 2025, the Company is in compliance with all operating lease financial covenants.

Future Minimum Lease Payments

Future minimum lease payments for the twelve months ending December 31, for each of the next five years and thereafter is as follows:

(1)

Weighted average discount rate 7.98%

Facilities Lessor

As of September 30, 2025, the Company was the lessorof 7 of its 11 owned facilities, and the sublessor ofone facility. These leases are triple net basis leases, meaning that the lessee (i.e., the third-party tenant of the property) is obligated for all costs of operating the property, including insurance, taxes and facility maintenance, as well as the lease or sublease payments to the Company. The weighted average remaining lease term for our 12 owned and subleased out facilities is approximately 2.9 years.

Future Minimum Lease Receivables

Future minimum lease receivables for the twelve months ending December 31, for each of the next five years and thereafter is as follows:

For further details regarding the Company's leased and subleased facilities to third-party operators, including a full summary of the Company's leases to third-parties and which comprise the future minimum lease receivables of the Company, see Note 7 -Leases and Leasing Transactions in Part II, Item 8, Financial Statements and Supplementary Data, included in the Annual Report.

NOTE 9. ACCRUED EXPENSES

Accrued expenses consist of the following:

(1)

September 30, 2025 includes approximately $4.6 million of bed tax accruals for the Healthcare Services segment. December 31, 2024 includes approximately $3.5 million of bed tax accruals for the Healthcare Services segment.

NOTE 10. NOTES PAYABLE AND OTHER DEBT

See Note 8 –Notes Payable and Other Debt in Part II, Item 8, Financial Statements and Supplementary Data, included in the Annual Report for a detailed description of all the Company's debt facilities.

Notes payable and other debt consists of the following:

(1)

U.S. Department of Agriculture ("USDA")

(2)

U.S. Small Business Administration ("SBA")

The following is a detailed listing of the debt facilities that comprise each of the above categories:

(1)

Represents interest rates as of September 30, 2025 as adjusted for interest rate floor limitations, if applicable. The rates exclude amortization of deferred financing costs which are approximately 0.13% per annum.

(2)

For theseven SNF’s, the Company has term loans insured 100% by HUD with financial institutions. The loans are secured by, among other things, an assignment of all rents paid under any existing or future leases and rental agreements with respect to the underlying facility. The loans contain customary events of default, including fraud or material misrepresentations or material omission, the commencement of a forfeiture action or proceeding, failure to make required payments, and failure to perform or comply with certain agreements. Upon the occurrence of certain events of default, the lenders may, after receiving the prior written approval of HUD, terminate the loans and all amounts under the loans will become immediately due and payable. In connection with entering into loans, the facilities entered into a healthcare regulatory agreement and a promissory note, each containing customary terms and conditions.

(3)

For thetwo SNF’s, the Company has term loans with financial institutions, which are insured 70% to 80% by the USDA. The loans have an annual renewal fee for the USDA guarantee of 0.25% of the guaranteed portion. The loans have prepayment penalties of 1% through 2020, capped at 1% for the remainder of the first 10 years of the term and 0% thereafter.

(4)

Forone SNF, commonly known as Southland, the Company has a term loan with a financial institution, which is insured 75% by the SBA.

(1)

Represents cash interest rates as of September 30, 2025. The rates exclude amortization of deferred financing of approximately 0.1% per annum.

(1)

Represents cash interest rates as of September 30, 2025 as adjusted for interest rate floor limitations, if applicable. The rates exclude amortization of deferred financing costs of 0.34% per annum.

(2)

The Meadowood Credit Facility is secured by the Meadowood Facility and the assets of Coosa, which is guaranteed by Regional Health Properties, Inc.

(3)

The Coosa Credit Facility, guaranteed by Regional Health Properties, Inc., includes customary terms, including events of default with an associated annual 5% default interest rate, and is secured by the Coosa Facility and the assets of Meadowood. Upon the occurrence of certain events of default, the lenders may terminate the Coosa Credit Facility and the Meadowood Credit Facility, and all amounts due under both credit facilities will become immediately due and payable. The Coosa Credit Facility has prepayment penalties of 5% in the 1 st year,4% in the 2 nd year and 1% thereafter.

(1)

Annual Insurance financing primarily for the Company's directors and officers insurance and professional liability for the facilities where the company is the licensed operator.

(2)

On December 30, 2022, Key Bank and the Company extended the maturity date from August 25, 2023 to August 25, 2025.

As of September 30, 2025, the Company had 18 credit related instruments outstanding that include various financial and administrative covenant requirements. Covenant requirements include, but are not limited to, fixed charge coverage ratios, debt service coverage ratios, minimum earnings before interest, taxes, depreciation, and amortization or earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs, and current ratios. Certain financial covenant requirements are based on consolidated financial measurements whereas others are based on measurements at the subsidiary level (i.e., facility, multiple facilities or a combination of subsidiaries). The subsidiary level requirements are as follows: (i) financial covenants measured against subsidiaries of the Company; and (ii) financial covenants measured against third-party operator performance. Some covenants are based on annual financial metric measurements, whereas others are based on monthly and quarterly financial metric measurements. The Company routinely tracks and monitors its compliance with its covenant requirements.

As of September 30, 2025, the Company was in compliance with the various financial and administrative covenants under all the Company's outstanding credit related instruments.

Scheduled Maturities

The schedule below summarizes the scheduled gross maturities as of September 30, 2025 for each of the next five years and thereafter.

NOTE 11. COMMON AND PREFERRED STOCK

On August 4, 2025, the Company reconvened its special meeting (the “Special Meeting”) of the holders of its common stock (the “Common Stock”), which Special Meeting was originally convened on July 29, 2025 and adjourned to August 4, 2025. The Special Meeting was called to consider the proposals set forth in the Company’s joint proxy statement/prospectus filed with the SEC on June 25, 2025 (as supplemented or amended, the “Joint Proxy Statement/Prospectus”) in connection with the proposed merger of SunLink, with and into the Company, with the Company surviving the merger as the surviving corporation.

Both of the required proposals in connection with the merger presented at the Special Meeting were approved by the requisite votes of the common stock shareholders of the Company as follows:

•

the proposal to approve the Amended and Restated Agreement and Plan of Merger, dated as of April 14, 2025, as amended, by and between the Company and SunLink and the transactions contemplated thereby, including the merger; and

•

the proposal to approve the issuance of shares of Common Stock and Series D Preferred Stock in connection with the merger.

On August 5, 2025, the Company filed Articles of Amendment to its Amended and Restated Articles of Incorporation with the Secretary of State of the State of Georgia to establishits Series D 8% Cumulative Convertible Redeemable Participating Preferred Shares, no par value per share. Shares of ours Series D Preferred Stock formed part of the merger consideration to be issued in connection with the closing of the merger.

On August 14, 2025, the Company issued 1,592,438 shares of the Company's common stock and 1,405,609 shares of the Company's Series D preferred stock as the purchase price consideration for the merger.

See Note 3 -Business Combinationfor more information on the merger.

Common Stock

As of September 30, 2025, the Company had 55,000,000 shares of Common Stock authorized and 3,934,677 shares issued and 3,923,797 shares outstanding. There wereno dividends declared or paid on the common stock during thethree and nine months ended September 30, 2025 and 2024.

Preferred Stock

As of September 30, 2025, the Company had 5,000,000 shares of Preferred Stock authorized and 3,805,785 shares issued and outstanding.

Series A Preferred Stock

As of September 30, 2025, the Company had 559,263 shares of Series A Preferred Stock issued and outstanding. No dividends were declared or paid on the Series A Preferred Stock for thethree and nine months ended September 30, 2025 and 2024.

Series B Preferred Stock

On January 29, 2025, the board of directors of the Company declared a dividend to the holders of its 12.5% Series B Cumulative Redeemable Preferred Shares (the “Series B Preferred Stock”), on a pro rata basis in proportion to the number of shares of Series B Preferred Stock held by such holders of 250,000 shares of the Company’s common stock, rounded down to the nearest whole share of Common Stock. The dividend was paid on February 19, 2025 to holders of record of the Series B Preferred Stock as of the close of business on February 10, 2025 and 249,990 shares of the Company's common stock were issued. The Company is required to pay the dividend of Common Stock to such holders of Series B Preferred Stock pursuant to the terms of Regional’s Amended and Restated Articles of Incorporation, which governs the terms of the Series B Preferred Stock.

On September 17, 2025, the Company completed the repurchase of 366,359 shares of its Series B Preferred Stock through three privately negotiated transactions.

As of September 30, 2025, the Company had 1,885,913 shares of Series B Preferred Stock issued and outstanding. Except for the dividends declared on January 29, 2025, no other dividends were declared or paid on the Series B Preferred Stock for thethree and nine months ended September 30, 2025 and 2024.

Series D Preferred Stock

Subject to the terms and conditions of the proposed The Company’s articles of amendment, beginning on July 1, 2027, holders of the Company’s Series D Preferred Stock receive, when, as, and if approved by the Company’s Board out of funds of the Company legally available for the payment of distributions and declared by the Company, cumulative preferential dividends at a rate per annum equal to the dividend rate (as defined below) of the liquidation preference (as defined below) of the Series D Preferred Stock in effect on the first calendar day of the applicable Dividend Period (as defined in the articles of amendment). The “dividend rate” shall mean (as a percentage of liquidation preference)8% per annum, subject to adjustment as provided in the Company’s articles of amendment. The “liquidation preference” shall mean, with respect to the Company’s Series D preferred stock, $12.50 per share of the Company’s Series D preferred stock, subject to adjustment as provided in the Company’s articles of amendment.

Except as otherwise required by the proposed Company’s articles of amendment or law, the Company’s Series D Preferred Stock will not have voting rights. However, as long as any shares of the Company’s Series D Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of at least (A) two-thirds of the Company’s Series D Preferred Stock outstanding at the time, if there are more than 200,000 shares of the Company’s Series D Preferred Stock outstanding at the time, or (B) a majority of the Company’s Series D Preferred Stock outstanding at the time, if there are 200,000 or fewer shares of the Company’s Series D Preferred Stock outstanding at the time, (i) authorize or create, or increase the authorized or issued amount of, any class or series of Senior Shares (as defined in the Company’s articles of amendment) or reclassify any of the authorized stock of the Company into such shares, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such shares; or (ii) amend, alter or repeal the provisions of the Company’s articles of incorporation, whether by merger, consolidation or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power of the Company’s Series D preferred stock.

The Company’s articles of amendment further provide that, so long as at least 200,000 shares of Company’s Series D Preferred Stock remain outstanding, the holders of Company’s Series D Preferred Stock voting as a separate class at a meeting of such shareholders duly called for that purpose shall be entitled to elect two members of the Company’s board of directors (each, a “Company’s Series D Preferred Stock director”); provided, however, that the initial Company’s Series D Preferred Stock directors shall be the two individuals designated by SunLink prior to the closing of the merger pursuant to the terms and conditions of the merger agreement (the “SunLink Designees”). As of the SunLink record date, SunLink has designated Dr. Steven J. Baileys and Gene E. Burleson as the SunLink Designees and each of them has agreed to serve as SunLink Designees.

The Company’s articles of amendment further provide that, so long as at least 200,000 shares of Company’s Series D Preferred Stock remain outstanding, the Company will not, without the affirmative vote of (i) a majority of the Company’s Board and (ii) both the Company’s Series D Preferred Stock directors, affect any of the following actions by the Company, whether by amendment, merger, consolidation, operation of law or otherwise: (i) enter into any transaction or agreement that would result in any sale, merger, recapitalization or liquidation event if the transaction would result in (A) the issuance or assumption of any Senior Shares or (B) the holders of Company’s Series D Preferred Stock receiving less than the greater of: (i) the liquidation preference (including accumulated accrued and unpaid dividends) and (ii) an amount equal to the product of (A) the average closing price of the Company’s common stock on (x) the National Securities Exchange (as defined in the Company’s articles of amendment) on which the Company’s common stock is then-listed and traded for the 60 trading days (as defined in the Company’s articles of amendment) immediately preceding the record date, or (y) the OTC on which the Company’s common stock is then-traded for 90 days immediately preceding the record date if the Company’s common stock is not then listed or traded on a National Securities Exchange by (B) the number of shares of the Company’s common stock into which the Company’s Series D Preferred Stock are then-convertible; or (ii) declare or pay any dividend on any class of equity securities of the Company other than the Company’s Series B Preferred Stock and Company’s Series D Preferred Stock unless all dividends applicable to both the Company’s Series B Preferred Stock and Company’s Series D Preferred Stock have been declared and paid to date.

The Company’s articles of amendment further provide that, so long as at least 200,000 shares of Company’s Series D Preferred Stock remain outstanding, no new Senior Shares or new Parity Shares (as defined in the Company’s articles of amendment) shall be issued and, other than the Company’s Series B Preferred Stock and the Company’s Series A Preferred Stock, be permitted to be outstanding. The Company’s articles of amendment further provide that, so long as at least 200,000 sharesof Company’s Series D Preferred Stock remain outstanding, the Company’s Series A Preferred Stock shall not be amended, and

Company shall not otherwise take action, to provide for (i) the accrual or payment of dividends on the Company’s Series A Preferred Stock, (ii) an increase of the liquidation preference of the Company’s Series A Preferred Stock, (iii) a right of conversion of the Company’s Series A Preferred Stock into the Company’s common stock or (iv) the exchange by the Company of the Company’s Series A Preferred Stock for the Company’s common stock. The Company’s articles of amendment further provide that, so long as at least 200,000 shares of Company’s Series D Preferred Stock remain outstanding, no Junior Shares (as defined in the Company’s articles of amendment) shall be issued or permitted to be outstanding by the Company which are convertible into the Company’s common stock with an effective (x) conversion price less than $20.00 per share of the Company’s common stock or (y) any conversion ratio more favorable to such Junior Shares than the substantial equivalent of the then-applicable conversion ratio (as defined below) for the Company’s Series D preferred stock. The Company’s Series D Preferred Stock is redeemable at the option of the Company, upon a change of control (as defined in the Company’s articles of amendment) and mandatorily on or before December 31, 2029, in each case subject to the terms and conditions of the Company’s articles of amendment.

The Company’s Series D Preferred Stock is convertible into shares of the Company’s common stock at the conversion ratio at the option of a holder of Company’s Series D Preferred Stock and mandatorily upon the following events: (i) there shall be 200,000 or fewer shares of Company’s Series B Preferred Stock outstanding; and (ii) the average closing price of the Company’s common stock on a National Securities Exchange is at least $20.00, as adjusted pursuant to the Company’s articles of amendment, over any 30 trading days following the date on which there are 200,000 or fewer shares of Company’s Series B Preferred Stock outstanding. The “conversion ratio” means 1.1330 shares of the Company’s common stock for every three shares of Company’s Series D preferred stock, subject to adjustment as provided in the Company’s articles of amendment. The Company’s Series D Preferred Stock shall not be entitled to the benefits of any retirement or sinking fund. The Company’s Series D Preferred Stock shall rank junior to the Company’s Series B Preferred Stock and on parity with the Company’s Series A Preferred Stock.

If a National Market Listing (as defined in the Company’s articles of amendment) of the Company’s common stock is not achieved by the Company on or before the last day of: (i) the sixth whole calendar month immediately after the merger (the “First Milestone Date”), or (ii) the twelfth whole calendar month immediately after the merger (the “Second Milestone Date”), or (iii) the eighteenth whole calendar month immediately after the merger (the “Third Milestone Date”) or (iv) the twenty-fourth whole calendar month immediately after the merger (the “Fourth Milestone Date”), then on the First Milestone Date the conversion ratio shall automatically be reduced, and on each succeeding Milestone Date automatically further reduced, by one-half of a share of Company’s Series D Preferred Stock in the number of shares of Company’s Series D Preferred Stock required for conversion into a share of the Company’s common stock. Each such reduction on any such Milestone Date once occurring shall not lapse or be subject to any correction event (as defined in the Company’s articles of amendment). “Milestone Date” shall mean, as applicable, the First Milestone Date, the Second Milestone Date, the Third Milestone Date or the Fourth Milestone Date.

For a further summary description of the material terms of the Company’s Series D preferred stock, see “Description of Company’s Series D preferred stock.” in the Registration Statement, Amendment No. 3 filed on Form S-4/A with the SEC on June 24, 2025.

As of September 30, 2025, the Company had 1,405,609 shares of Series D Preferred Stock issued and outstanding. No dividends were declared or paid on the Series D Preferred Stock for thethree and nine months ended September 30, 2025.

NOTE 12. STOCK BASED COMPENSATION

Stock Incentive Plans

As of September 30, 2025, the number of securities remaining available for future issuance under the Company's 2023 Omnibus Incentive Plan ("2023 Equity Plan") was 76,000.

For thethree and nine months ended September 30, 2025 and 2024, the Company recognized stock-based compensation expense as follows:

As of September 30, 2025, the remaining stock-based compensation expense that is expected to be recognized in future periods is approximately $0.4 million.

Restricted Stock

The following table summarizes the Company's restricted stock activity for thenine months ended September 30, 2025:

On June 20, 2025, a Restricted Stock Award ("RSA") with respect to 65,000 shares of common stock was granted under the 2023 Equity Plan, which will vest in two equal annual installments on June 20, 2026 and June 20, 2027.

On August 14, 2025, a RSA with respect to 100,000 shares of common stock was granted as an inducement grant ("inducement grant") to a new officer of the Company. As such, the inducement grant was issued outside the Company's 2023 Equity Plan. Under the terms of the inducement grant award, the RSA will vest in three substantially equal installments on August 14, 2025, August 14, 2026 and August 14, 2027.

The unvested shares at September 30, 2025 will vest over the next 1.7 years with $365 thousand in compensation expense recognized over this period.

Common Stock Options

The following summarizes the Company's employee and non-employee stock option activity for thenine months ended September 30, 2025:

No stock options were granted for the nine months ended September 30, 2025. All vested stock options were exercised during the nine months ended September 30, 2025; thus, there are no outstanding stock options as of September 30, 2025.

Common Stock Warrants

The following summarizes the Company's employee and non-employee common stock warrant nine months ended September 30, 2025:

No warrants were granted during thenine months ended September 30, 2025. All vested warrants expired during the nine months ended September 30, 2025; thus, there are no outstanding common stock warrants as of September 30, 2025.

NOTE 13. COMMITMENTS AND CONTINGENCIES

Regulatory Matters

Laws and regulations governing federal Medicare and state Medicaid programs are complex and subject to interpretation. Compliance with such laws and regulations can be subject to future governmental review and interpretation as well as significant regulatory action including fines, penalties, and exclusion from certain governmental programs. As of September 30, 2025, all of the Company's facilities operated by Regional or leased and subleased to third-party operators are certified by CMS and are operational. See Note 8- Leases.

Legal Matters

The Company is a party to various legal actions and administrative proceedings and is subject to various claims arising in the ordinary course of business, including claims that the services the Company provided during the time it operated SNFs resulted in injury or death to the patients of the Company's facilities and claims related to professional and general negligence, employment, staffing requirements and commercial matters. Although the Company intends to vigorously defend itself in these matters, there is no assurance that the outcomes of these matters will not have a material adverse effect on the Company's business, results of operations and financial condition.

The Company previously operated, and the Company and its tenants now operate, in an industry that is highly regulated. As such, in the ordinary course of business, the Company and its tenants are continuously subject to state and federal regulatory scrutiny, supervision and control. Such regulatory scrutiny often includes inquiries, investigations, examinations, audits, site visits and surveys, some of which are non-routine. In addition, the Company believes that there has been, and will continue to be, an increase in governmental investigations of long-term care providers, particularly in the area of Medicare and Medicaid false claims, as well as an increase in enforcement actions resulting from these investigations. Adverse determinations in legal proceedings or governmental investigations against or involving the Company or its tenants, whether currently asserted or arising in the future, could have a material adverse effect on the Company's business, results of operations and financial condition.

Professional and General Liability Claims

As of September 30, 2025, the Company is a defendant in one professional and general liability action related directly to patient care that our current or prior tenants provided to their patients.

As of September 30, 2025, the Company is a defendant in one professional and general liability action commenced on behalf of one of our former patients who received care at one of our facilities. The plaintiff in this action alleges negligence due to failure to provide adequate and competent staff resulting in injuries, pain and suffering, mental anguish and malnutrition and seeks unspecified actual and compensatory damages, and unspecified punitive damages. This action is covered by insurance, except that any punitive damages awarded would be excluded from coverage.

See Note 15 –Subsequent Events for more information on litigation proceedings.

NOTE 14. SEGMENT RESULTS

The chief operating decision maker (“CODM”) is the President and Chief Executive Officer. The Company represents three reportable segments, based on how its CODM evaluates the business and allocates resources. The CODM assesses performance for the Company and decides how to allocate resources based on each segments Income (Loss) From Operations ("Operating Income"). The CODM uses Operating Income to evaluate the performance of each segment in deciding whether to reinvest profits into the segment. The CODM evaluates performance based on Operating Income, as noted in the table below. The Company reports segment information based on the "significant expense principle” defined in ASC 280, Segment Reporting along with other segment items, which is the difference between segment revenue and less segment expenses disclosed under the significant expense principle for each reported measure of segment profit or loss.

The Company hasthree primary reporting segments:(i) Real Estate Services, which consists of the leasing and subleasing of long-term care and senior living facilities to third-party tenants,(ii) Healthcare Services, which consists of the operation of the Glenvue, Meadowood, Georgetown, Sumter, Southland, and Mountain Trace facilities and (iii) (iii) Pharmacy Service Segment, which consists of four operational areas, retail pharmacy products and services, institutional pharmacy services, which consists of specialty and non-specialty pharmaceutical and products to institutional clients or to patients in institutional settings, non-institutional pharmacy services consisting of the provision specialty and non-specialty pharmacy and biological products to clients or patients in non-institutional settings including private residential homes and durable medical equipment, consisting primarily of the sale and rental products for institutional clients or to patients and institutional settings and patient-administered home care .

The table below presents the results of operations for our reporting segments for the periods presented.

The CODM does not regularly review total assets for our reportable segments as total assets are not used to assess performance or allocate resources.

NOTE 15. SUBSEQUENT EVENTS

On November 6, 2025, the Company's wholly-owned subsidiary Coosa Nursing ADK, LLC sold its Coosa Valley Health and Rehab (“the Coosa Valley facility”) to an unaffiliated company for cash of $10.6 million. A gain on the sale of the property of approximately $3.7 million is expected to be reported in Regional’s results for the quarter ended December 31, 2025. Debt of approximately $4.9 million was repaid at closing. Cash of approximately $4.7 million was received at closing, after payments of $0.6 million of transaction expenses and $ $0.4 million deposited to escrow accounts for future tax payment related to the sold assets. The cash received at closing will be used by Regional for general corporate and other purposes.