REGIONAL HEALTH PROPERTIES, INC

March 31, 2026

NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Regional Health Properties, Inc. (the "Company") is a healthcare company that owns, operates and invests in healthcare real estate and operating businesses focused on long-term care, senior housing and pharmacy services. Historically, the Company operated primarily as a healthcare real estate platform that leased skilled nursing and senior housing facilities to third-party operators under long-term triple-net lease arrangements. Over time, and particularly following recent strategic initiatives and acquisitions, the Company has evolved toward a more integrated healthcare operating model that combines healthcare real estate ownership with the direct operation of healthcare facilities and related healthcare services.

Through its subsidiaries, the Company owns and operates skilled nursing and senior housing communities that provide a range of healthcare and residential services, including sub-acute and post-acute skilled nursing care, intermediate nursing care, rehabilitative therapy, memory care, Alzheimer’s and dementia care and senior living services. In addition to operating healthcare facilities, the Company owns healthcare real estate that is leased to third-party operators pursuant to triple-net lease arrangements.

Since August 14, 2025, as part of the merger with SunLink Health Systems, the Company also acquired a pharmacy business located in Crowley, Louisiana that provides retail pharmacy services, institutional pharmacy services and durable medical equipment. The pharmacy business expands the Company’s participation across the care continuum and provides additional operating capabilities that complement its healthcare facility operations.

The Company currently operates acrosssix states, with the majority of its facilities located in the Southeastern United States. The Company hasthree reportable segments: (i) Healthcare Services, which consists of the operation of skilled nursing and senior housing communities; (ii) Pharmacy Services, which consists of retail and institutional pharmacy services and durable medical equipment; and (iii) Real Estate, which consists of the leasing and subleasing of healthcare properties to third-party tenants. These segments reflect the Company’s evolution from a healthcare landlord into a more diversified owner-operator with both real estate and operating capabilities.

As of March 31, 2026, the Company’s common stock, Series A Redeemable Preferred Stock,12.5% Series B Cumulative Redeemable Preferred Shares, and Series D 8% Cumulative Convertible Redeemable Participating Preferred Shares were quoted on the OTCQB under the symbols “RHEP,” “RHEPA,” “RHEPB,” and “RHEPZ,” respectively.

Basis of Presentation

The accompanying condensed consolidated financial statements ("consolidated financial statements") are prepared in conformity with United States ("U.S.") generally accepted accounting principles ("GAAP") in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC"). The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the 2025 audited consolidated financial statements and notes thereto, which are included in the 2025 Form 10-K filed with the U.S. Securities and Exchange Commission ("SEC") on April 2, 2026.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported results of operations during the reporting period. Significant estimates include patient care revenues, rent revenues, allowance for doubtful accounts and credit losses, contractual allowances for Medicaid, Medicare, and managed care reimbursements, deferred tax valuation allowance, valuation of goodwill and other long-lived assets, and cash flow projections. Actual results could differ materially from those estimates.

Revenue Recognition and Allowance for Credit Losses

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, and ASC Topic 842, Leases, as applicable to the nature of the underlying revenue-generating activity. Revenue is recognized in an amount that reflects the consideration the Company expects to receive in exchange for goods or services transferred to customers or, in the case of lease arrangements, in accordance with the terms of the applicable lease agreements. The Company’s revenues are derived primarily from (i) patient care and other healthcare services provided through its Healthcare Services segment, (ii) pharmacy goods and services and durable medical equipment provided through its Pharmacy Services segment, and (iii) rental income from healthcare properties leased to third-party operators through its Real Estate segment. The Company evaluates the collectability of receivables and records allowances for credit losses and other valuation adjustments in accordance with ASC Topic 326, Financial Instruments—Credit Losses.

Patient Care Revenue. Revenue from the Healthcare Services segment is derived from services rendered to residents and patients at the Company’s skilled nursing and senior housing communities. The Company receives payment for these services from several sources, including: (i) the federal government under the Medicare program administered by the Centers for Medicare & Medicaid Services (“CMS”), (ii) state governments under their respective Medicaid and similar programs, (iii) commercial insurers and managed care organizations, and (iv) private pay residents and other individual patients. The transaction price is based on established billing rates, reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients, and other implicit price concessions. The Company recognizes revenue in the amount it expects to be entitled to receive in exchange for the services provided, including variable consideration for estimated retroactive reimbursement adjustments, if any. Performance obligations are satisfied over time as services are rendered to residents and patients. Amounts assessed as uncollectible from residents and patients are generally recorded as implicit price concessions and reflected as a direct reduction of patient care revenue.

Pharmacy Services Revenue. Revenue from the Pharmacy Services segment is derived primarily from the sale of pharmacy products and the provision of pharmacy-related services, including retail pharmacy services, institutional pharmacy services, and durable medical equipment. Revenue is recognized when control of the promised goods or services is transferred to the customer, generally on the date the applicable goods are dispensed or delivered and services are provided. Each prescription claim or sale represents a separate performance obligation. Significant portions of Pharmacy Services revenue are reimbursed by the federal Medicare Part D program and, to a lesser extent, state Medicaid programs and other third-party insurance payors. The Company records Pharmacy Services revenue at amounts billable to patients or payors, adjusted at the time of revenue recognition for estimates of variable consideration arising from anticipated differences between billed charges and amounts expected to be reimbursed. Accordingly, Pharmacy Services revenue and related receivables are reported at the net amount the Company expects to ultimately realize from patients, governmental programs, and other third-party payors.

Rental Revenue. Revenue from the Real Estate segment is recognized in accordance with ASC Topic 842, Leases. The Company’s triple-net leases generally provide for fixed rental payments and may include periodic and determinable increases in rent. Rental revenue is recognized on a straight-line basis over the non-cancelable lease term when collectability of substantially all lease payments is probable. The recognition of rental income on a straight-line basis may result in revenues recognized in advance of contractual cash receipts, creating straight-line rent receivables that are included in other assets on the consolidated balance sheets. If collectability of lease payments is no longer considered probable, the Company ceases recognition of rental income on a straight-line basis, limits future rental revenue recognition to cash received, and writes off or reserves against any existing straight-line rent receivables or other related balances, as appropriate.

Receivables and Allowance for Credit Losses. The Company measures financial assets carried at amortized cost, including trade accounts receivable, tenant receivables, straight-line rent receivables, and certain other financing-related receivables, at the net amount expected to be collected in accordance with ASC Topics 326 and 842, accordingly.

In estimating expected credit losses, the Company evaluates relevant available information, including historical collection experience, the age of receivables, current collection trends, the financial condition and credit quality of patients, customers, tenants, and payors, the nature and level of any collateral or guarantees, and current and reasonable and supportable forecasts of future economic conditions. Expected credit losses are measured over the contractual life of the asset, adjusted for expected prepayments when appropriate.

For patient care receivables in the Healthcare Services segment, the Company considers the payer mix, the aging of receivables, historical collections, and expected reimbursements from Medicare, Medicaid, managed care, and private-pay sources. Amounts due from residents and patients that are not expected to be collected are generally treated as implicit price concessions and recorded as reductions of patient care revenue. To the extent a receivable is established and collection subsequently becomes not probable due to a change in circumstances, the Company records an allowance for credit losses or bad debt expense, as appropriate.

For Pharmacy Services receivables, the Company evaluates concession allowances and expected credit losses based on historical collection trends, customer and payor mix, the age and nature of receivables, and current and expected future economic conditions. Pharmacy accounts receivable are presented net of estimated variable consideration and expected credit losses, such that the reported balance reflects the amount expected to be ultimately collected.

For Real Estate receivables, including straight-line rent receivables and working capital or other tenant-related receivables, the Company assesses collectability based on the tenant’s payment history, financial condition, the strength of any guarantors, the value of underlying collateral, lease-level operating performance, and broader economic conditions. If facts and circumstances indicate that amounts due may not be collectible, the Company records an allowance for credit losses or, if collectability of lease payments is no longer probable, adjusts rental revenue recognition prospectively to a cash basis.

Changes in estimates regarding variable consideration, contractual adjustments, implicit price concessions, or expected credit losses are recognized in the period in which the change in estimate becomes known.

Activity in the allowance for credit losses in the Pharmacy segment for the periods presented included the following:

Activity in the allowance for credit losses in the Real Estate segment for the periods presented included the following:

Activity in the allowance for credit losses in the Healthcare segment for periods presented included the following:

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

Inventory

As of March 31, 2026 and December 31, 2025, the Company had approximately$1.6 million and$1.4 million, respectively, 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.

Prepaid Expenses and Other

As of March 31, 2026 and December 31, 2025, the Company had approximately$1.4 million and$1.6 million, respectively, in prepaid expenses and other, which primarily relate to insurance for the facilities we operate, directors’ and officers’ insurance, and mortgage insurance premiums

Notes Receivable

Notes receivable are initially recorded when accounts receivable are transferred into a promissory note and are recorded as an alternative to accounts receivable to memorialize an unqualified promise to pay a specific sum, typically with interest, in accordance with a defined payment schedule. The Company’s payment terms with customers on promissory notes can vary based on several factors and the circumstances of each promissory note, however typically promissory notes mature over a 1 to 3 year period. Similar to accounts receivable, each reporting period the Company evaluates the collectability of outstanding notes receivable balances. We evaluate the collectability of our notes receivable based on a combination of credit quality indicators, including, but not limited to payment status, financial strength of the customer, and historical write-offs. We may establish reserves, accept modified payment terms, or book direct write offs for any estimated credit loss with generally a corresponding charge to credit loss expense in our Consolidated Statement of Operations and Comprehensive Earnings. Subsequent changes in our estimate of credit losses may result in a corresponding increase or decrease to the credit loss expense in our Consolidated Statement of Operations and Comprehensive Earnings.

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 5 –Assets Held for Sale for additional details on assets held for sale as of March 31, 2026 and December 31, 2025. 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.

Accounts Payable

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

Other Liabilities

As of March 31, 2026 and December 31, 2025, the Company had approximately$0.9 million and$0.9 million, respectively in short-term other liabilities, which mainly represent short-term operating lease obligations.

As of March 31, 2026 and December 31, 2025, the Company had approximately$1.6 million and$1.6 million, respectively in long-term other liabilities, consisting of security lease deposits and sublease improvement funds.

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 March 31, 2026, the Company's leased facility is accounted for as an operating lease. 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 assesses any new contracts or modification of contracts in accordance with ASC 842, Leases, to determine the existence of a lease and its classification. We are reporting 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 their respective leases with us.

Insurance

The Company maintains insurance for professional and general liability claims for its Healthcare Services segment and Pharmacy segments and maintains coverage amounts that are required by its mortgage lenders. The Company elects to maintain a high deductible policy for working compensation. In addition, the Company maintains certain other insurance programs, including commercial general liability, property, casualty, directors’ and officers’ liability, crime, and employment practices liability.

Net 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.

For the three months ended March 31, 2026 and 2025, diluted net loss per share attributable to common stockholders is the same as basic net loss per share since the effect of potentially dilutive securities is anti-dilutive given the net loss position of the

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

For further information regarding the Company's Equity Plans, see Note 11 -Stock Based Compensation.

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.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270), which aims to: (i) specify form and content choices for interim financial statements and accompanying notes; (ii) add a comprehensive list of required disclosures from numerous Codification Topics to Topic 270; and (iii) introduce a disclosure principle requiring events since the end of the previous annual reporting period to be disclosed if they materially affect the entity. ASU 2025-11 is effective for interim periods in fiscal years beginning after December 14, 2027, with early adoption permitted. The Company is currently evaluating the impact that ASU 2025-11 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’s liquidity profile is influenced by the operating performance and working capital needs of its Healthcare Services and Pharmacy Services segments, as well as rent collections, tenant performance and refinancing activity within its Real Estate segment. In 2025, the expansion of operated facilities increased the Company’s use of working capital, particularly accounts receivable, payroll-related expenditures and other operating costs, while the Real Estate segment continued to provide rental income and asset sale proceeds. As of March 31, 2026, the Company held approximately$1.1 million in unrestricted cash and$10.1 million in net accounts receivable, primarily comprised of Healthcare Services and Pharmacy Services patient accounts receivable.

The Company also experienced changes in its listing status in 2025. Until February 5, 2025, the Company’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 OTCQB under the symbols “RHEP” and “RHEPA,” respectively. Trading on the OTC Markets presents challenges, including reduced liquidity, wider bid-ask spreads, limited analyst coverage and greater regulatory burdens on broker-dealers, 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.

Short-term Liquidity

Management expects that the Company’s short-term liquidity requirements over the twelve months following the issuance of these unaudited condensed consolidated financial statements will be funded primarily through collections of patient and rent accounts receivable, refinancing activity, including refinancing related to the Southland facility, additional debt borrowings and proceeds from the sale of assets classified as held for sale. Regional has committed to a plan to sell an additional asset classified as held for sale to generate additional liquidity in support of operations and potential investment opportunities. See Note 5 – Assets Held for Sale.

During the quarter ended March 31, 2026, the Company used$0.9 million of cash in operating activities, largely due to working capital needs and timing differences in accounts payable and accrued expense payments. Management continues to focus on collections of aged patient receivables and on stabilizing the operating performance of the Company’s Healthcare Services and Pharmacy Services segments. The Company’s short-term liquidity continues to be affected by the transition of certain facilities from leased to operated status, which has increased working capital requirements, including payroll, supplies and patient receivables.

The Company’s future short-term liquidity will also depend on the financial performance of the Company’s leased facilities and the facilities managed by CJM Advisors, including Georgetown, Glenvue, Mountain Trace, Southland and Sumter, as well as the performance of the Pharmacy Services business. In addition, the Real Estate segment consists of leases toone operator. Aspire Regional Partners, through a group of affiliated tenants, leases five facilities. The Company therefore depends on tenants affiliated with Aspire for all of its rent revenues, and there can be no assurance that such tenants will have sufficient assets, income or access to financing to enable them to make rental payments or otherwise satisfy their lease obligations.

Long-term Liquidity

Management expects that the Company’s long-term liquidity needs will be funded primarily from cash generated in the ordinary course of business and, as needed, from the sale of securities. The Company’s ability to generate cash from operations on a long-term basis will depend on the operating performance of its Healthcare Services, Pharmacy Services and Real Estate segments, including occupancy, reimbursement levels, labor costs, pharmacy reimbursement collections, rent collections and overall operating margins.

The Company’s ability to raise capital through the sale of securities will depend on market conditions, investor interest, the trading price and liquidity of its securities and its overall financial performance. Because the Company’s securities trade on the OTCQB rather than a national securities exchange, access to equity capital may be more limited than that of issuers listed on a national securities exchange. Accordingly, there can be no assurance that long-term liquidity from the sale of securities will be available on acceptable terms, if at all.

Debt

As of March 31, 2026, the Company had$42.6 million in indebtedness, net of$0.8 million deferred financing costs and unamortized discounts. The Company anticipates net principal repayments of approximately$8.1 million during the next twelve-month period, approximately$4.1 million of routine debt service amortization,$0.2 million payment of bond debt, and$3.8 million of Southland's maturing debt.

At March 31, 2026, the Company was in compliance with the various financial and administrative covenants related to all of the Company's credit facilities, except with respect to the Southland-related USDA and SBA notes that are subject to the forbearance arrangements. Management continues to monitor compliance closely and evaluate refinancing and other liquidity alternatives.

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 performing this evaluation, management considered the Company’s current financial condition and liquidity sources, including unrestricted cash, forecasted future cash flows, anticipated collections of receivables, expected refinancing activity, expected debt borrowings, anticipated proceeds from assets held for sale and the Company’s obligations due within the next twelve months, together with recurring operating expenses. Based on this evaluation, management concluded that it is probable that the Company will be able to meet its obligations arising within one year after the date these consolidated financial statements are issued.

NOTE 3. 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 4. PROPERTY AND EQUIPMENT

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

The following table summarizes total depreciation and amortization expense three months ended March 31, 2026 and 2025:

NOTE 5. ASSETS HELD FOR SALE

The following table sets forth the Company's assets held for sale by asset description:

The following table sets for the Company's assets held for sale by facility:

NOTE 6. 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 the three months ended March 31, 2026 and 2025:

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 7. LEASES

Operating Leases

As of March 31, 2026 and December 31, 2025, the Company leasesone 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 2.6 years as of March 31, 2026. The Company subleases the Covington facility to a third party.

The Company subleases certain office space located in Atlanta, Georgia, which will expire on July 31, 2027.

The Pharmacy Segment business assets at the Merger included $593 thousand 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. As of March 31, 2026, the Company's total Right of Use asset balance was $2.8 million and is a part of the Company's Other assets balance of $3.6 million. As of December 31, 2025, the Company's total Right of Use asset balance was $2.9 million and is a part of the Company's Other assets balance of $3.8 million.

As of March 31, 2026, 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 Leased or Subleased by the Company

On February 1, 2026, the Company terminated the lease with C-Ross for the Autumn Breeze facility. We have subsequently entered into a management agreement with CJM Advisors to provide day-to-day management services.

As of March 31, 2026, five facilities (four owned by Regional and one leased to Regional) are leased or subleased on a triple net basis, meaning that the lessee (i.e., the third-party operator of the property, or the Company with respect to the operated facilities) is obligated under the lease or sublease, as applicable, for all liabilities of the property in respect to insurance, taxes and facility maintenance, as well as the lease or sublease payments, as applicable. As of March 31, 2026, all facilities are operated by Aspire Regional Partners.

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 8 -Leases and Leasing Transactions in Part I, Item 1, Financial Statements and Supplementary Data, included in the Annual Report.

NOTE 8. ACCRUED EXPENSES

Accrued expenses consist of the following:

(1)

As of March 31, 2026 and December 31, 2025 includes approximately$0.7 million of bed taxes in arrears related to the Wellington Transition in 2020.

(2)

As of March 31, 2026 and December 31, 2025, the remaining escheatment liabilities for discontinued operations are $0.3 million and are included in other accrued expenses.

NOTE 9. NOTES PAYABLE AND OTHER DEBT

On February 27, 2026, the Company and Erin Property Holdings, LLC (the “Borrower”) entered into two Forbearance Agreements with effective dates of February 1, 2026 (the “Forbearance Agreements”) with Cadence Bank, N.A. (the “Lender”) relating to certain defaults by the Company and the Borrower under the loan agreements in the principal amount of $5,000,000 due on July 27, 2036 (the “USDA Note”) and the principal amount of $800,000 due on July 27, 2036 (the “SBA Note” and, together with the USDA Note, the “Notes”) that were issued by the Borrower to the Company to reflect payment obligations pursuant to the Security Agreement, dated as of July 27, 2011 (the “Security Agreement”), between the Borrower and the Lender.

Pursuant to the Forbearance Agreements, (a) the Borrower agreed to make payments of $21,047.76 as a one-time forbearance payment and $6,764.21 for the 2026 USDA annual renewal fee toward the SBA Note no later than February 27, 2026, and (b) the Company and the Lender agreed, subject to the terms and conditions set forth in the Forbearance Agreements, to forbear from exercising its rights and remedies on account of the failure by the Company and the Borrower to pay the amounts due under the USDA Note and SBA Note by the expiration of the period (“Forbearance Period”) of February 1, 2027.

During the Forbearance Period, the Company and the Borrower shall make monthly payments of principal and interest in accordance with the terms of the USDA Note and the SBA Note with interest continuing to accrue in accordance with the terms of the Notes which amounts shall remain the obligation of the Company and the Borrower.

See Note 10 –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 March 31, 2026 as adjusted for interest rate floor limitations, if applicable. The rates exclude amortization of deferred financing costs which are approximately 0.16% 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 March 31, 2026. The rates exclude amortization of deferred financing of approximately 0.10% per annum.

(1)

Represents cash interest rates as of March 31, 2026 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.

(1)

Annual Insurance financing primarily for the Company's directors and officers insurance.

(2)

On December 30, 2022, Key Bank and the Company extended the maturity date from August 25, 2025 to August 25, 2030.

As of March 31, 2026, the Company had 17 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 March 31, 2026, the Company was in compliance with the various financial and administrative covenants related to all of the Company’s credit facilities, except with respect to the Southland-related USDA and SBA notes that are subject to the forbearance arrangements.

Scheduled Maturities

The schedule below summarizes the scheduled gross maturities as of March 31, 2026 for each of the next five years and thereafter.

NOTE 10. COMMON AND PREFERRED STOCK

Common Stock

As of March 31, 2026, the Company had 55,000,000 shares of Common Stock authorized and 3,945,557 shares issued and 3,934,667 shares outstanding. There wereno dividends declared or paid on the common stock during thethree months ended March 31, 2026 and 2025.

Preferred Stock

As of March 31, 2026, the Companyhad 5,000,000 shares of Preferred Stock authorized and 3,675,813 shares issued and outstanding.

Series A Preferred Stock

As of March 31, 2026, the Company had 559,263 shares of Series A Preferred Stock issued and outstanding. There wereno dividends declared or paid on the Series A Preferred Stock for thethree months ended March 31, 2026 and 2025.

Series B Preferred Stock

In January 2026, the Company purchased 30,232 shares of its Series B Preferred Stock for a cost of $184,677 under the Company's Stock Repurchase Plan authorized on November 25, 2025.

In January 2025, the board of directors of the Company declared a dividend to the holders of its 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 in February 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.

As of March 31, 2026, the Company had 1,710,941 shares of Series B Preferred Stock issued and outstanding. Except for the dividends declared in January 2025, no other dividends were declared or paid on the Series B Preferred Stock for thethree months ended March 31, 2026.

Series D Preferred Stock

As of March 31, 2026, 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 forthe three months ended March 31, 2026.

See Note 12 –Common and Preferred Stockin Part II, Item 8, Financial Statements and Supplementary Data, included in the Annual Report for more information on our stock.

NOTE 11. STOCK BASED COMPENSATION

On January 5, 2026, the Company's shareholders approved the Regional Health Properties, Inc. Amended and Restated 2023 Omnibus Incentive Compensation Plan (the “A&R Plan”). The A&R Plan (i) increased the number shares of our common stock authorized for issuance under the A&R Plan by 550,000 shares, which increased the total number of authorized shares available for issuance under the A&R Plan to 775,000 and (ii) increased the number of share of our common stock that may be issued pursuant to incentive stock options under the A&R Plan to 775,000. All other terms of the 2023 Omnibus Incentive Compensation Plan remained the same.

Stock Incentive Plans

As of March 31, 2026, the number of securities remaining available for future issuance under the Company's A&R Plan is 408,000.

For the three months ended March 31, 2026 and 2025, the Company recognized stock-based compensation expense as follows:

Restricted Stock Awards

The following table summarizes the Company's restricted stock awards ("RSAs") activity for the three months ended March 31, 2026:

No RSAs were granted for the three months ended March 31, 2026. The remaining unvested shares at March 31, 2026 will vest over the next 1.3 years with $252 thousand in compensation expense recognized over this period.

Restricted Stock Units

The following table summarizes the Company's restricted stock units ("RSUs") activity forthe three months ended March 31, 2026:

On January 16, 2026, a RSU award with respect to 100,000 shares of common stock was granted under the A&R Plan, which will vest in two equal annual installments on January 16, 2027 and January 16, 2028. The remaining unvested shares at March 31, 2026 will vest over the next 1.8 years with $116 thousand in compensation expense recognized over this period.

Common Stock Options

The following summarizes the Company's employee stock option activity for thethree months ended March 31, 2026:

For the three months ended March 31, 2026, stock option awards with respect to 118,000 shares of common stock were granted under the A&R Plan. For thethree months ended March 31, 2025, no stock option awards were granted.

The remaining unvested shares at March 31, 2026 will vest over the next 1.8 years with $102 thousand in compensation expense recognized over this period.

The following summarizes the weighted average information on our stock option awards granted using the Black-Scholes option-pricing model inputs for thethree months ended March 31, 2026 and 2025:

The following summary information reflects stock options outstanding, vested, and related details as of March 31, 2026:

NOTE 12. 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 may be subject to future governmental review, audit, investigation and interpretation, as well as significant regulatory action, including fines, penalties and exclusion from certain governmental programs.

As of March 31, 2026, the Company’s facilities that are operated by the Company, leased or subleased to third-party operators, or otherwise managed by third parties were certified by the Centers for Medicare & Medicaid Services (“CMS”) and were operational. Because the Company operates through Healthcare Services, Pharmacy Services and Real Estate segments, regulatory exposure may arise directly from the Company’s operated businesses, indirectly through tenant and operator performance at leased facilities, or from legacy matters relating to prior periods of direct operations. Based on information currently available, the Company believes that it is in compliance in all material respects with applicable laws and regulations relating to its current operations, although there can be no assurance that governmental agencies will not reach different conclusions in the future.

Legal Matters

The Company is party to various legal actions and administrative proceedings and is subject to various claims arising in the ordinary course of business, including claims relating to prior direct facility operations, current operated facilities, employment matters, staffing requirements, commercial disputes and other business matters. The Company believes that many of these matters are defensible and intends to defend them vigorously unless settlement is determined to be in the best interests of the Company. However, there can be no assurance that the resolution of any such matters will not have a material adverse effect on the Company’s business, results of operations or financial condition.

In addition, the Company’s tenants and operators conduct business in a highly regulated industry and are subject to continuing state and federal scrutiny, supervision and control. Such scrutiny may include inquiries, investigations, examinations, audits, site visits and surveys, some of which are non-routine. The Company believes that governmental investigations and enforcement activity involving long-term care providers have increased, particularly in areas involving Medicare and Medicaid reimbursement, false claims, staffing requirements and quality-of-care matters. Adverse determinations in legal proceedings or governmental investigations involving the Company, its prior operations, or its tenants and operators could have a material adverse effect on the Company’s business, results of operations and financial condition.

Professional and General Liability Claims Covered by Insurance

As of March 31, 2026, the Company was a defendant in two professional and general liability actions arising from care provided to former patients at the Company’s facilities. The plaintiff alleges negligence, including alleged failures to provide adequate and competent staffing, and seeks unspecified actual, compensatory and punitive damages for alleged injuries, pain and suffering, mental anguish and malnutrition. The Company believes this matter is covered by insurance, except that any punitive damages that may be awarded would be excluded from coverage.

NOTE 13. SEGMENT RESULTS

Thechief 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 Autumn Breeze, Georgetown, Glenvue, Meadowood, Sumter, Southland, and Mountain Trace 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 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 14. SUBSEQUENT EVENTS

The Company has evaluated all subsequent events through the date the consolidated financial statements were issued and filed with the SEC. There were no material subsequent events in the quarter.