RHE Regional Health Properties Inc

Regional Health Properties, Inc. (the “Company,” “Regional Health,” “we”, “us” or “our”) (NYSE American: RHE) (NYSE American: RHE-PA), a self-managed healthcare real estate investment company that invests primarily in real estate purposed for senior living and long-term care, today announced its financial results for the third quarter ended September 30, 2023.

THIRD QUARTER 2023 FINANCIAL HIGHLIGHTS

• Reduced loss from operations from $2.0 million in the prior year quarter to $0.4 million in the current quarter
• Reduced net loss per share of common stock to $0.52 in the current third quarter as compared to $1.48 for the third quarter of 2022
• Generated $0.7 million of Adjusted EBITDA1 in the quarter, compared to $0.1 million in the third quarter of 2022
• Collected 93% of contractual rent as of September 30, 2023

THIRD QUARTER BUSINESS HIGHLIGHTS

• On August 7, 2023, Regional Health announced the receipt of the acceptance letter from the NYSE American LLC (the “Exchange”) on August 1, 2023, that the Company’s plan to regain compliance with the Exchange’s continued listing standards had been accepted.
• On August 3, 2023, Regional Health announced that its 12.5% Series B Cumulative Redeemable Preferred Shares (the “Series B Preferred Stock”) commenced trading on the OTCQB Venture Market, operated by the OTC Markets Group, Inc., under the symbol “RHEPB”.

MANAGEMENT COMMENTS

Brent Morrison, Regional Health’s President and Chief Executive Officer, commented, “Our operating partners continue to make progress mitigating lower than average occupancy and tight labor markets. As a result, our EBITDAR 3 coverage remains strong at 1.5x. We remain hopeful this momentum will continue into the fourth quarter as well as 2024”

Mr. Morrison continued, “With the transformative transaction behind us, we continue to look for opportunities to further simplify our capital structure and further reduce corporate expenses. As our stock price continues to trade well below net asset value, management remains committed to improve transparency for investors.”

FINANCIAL RESULTS FOR QUARTER ENDED SEPTEMBER 30, 2023

For the third quarter 2023, the Company reported total revenue of $4.1 million, a net loss of $1.0 million, EBITDA2 of $0.3 million and Adjusted EBITDA of $0.7 million.

BALANCE SHEET AND LIQUIDITY

As of September 30, 2023, the Company had $51.4 million of outstanding indebtedness with a weighted-average annual interest rate of 5.1% and a weighted-average maturity of approximately 19 years.

For the nine months ended September 30, 2023, net cash provided by operating activities was $3.4 million as compared to net cash used in operating activities of $2.2 million for the nine months ended September 30, 2022.

About Regional Health Properties

Regional Health Properties, Inc., a Georgia corporation, is a self-managed healthcare real estate investment company that invests primarily in real estate purposed for senior living and long-term care. For more information, visit www.regionalhealthproperties.com.

Important Cautions Regarding Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as “expects,” “intends,” “believes,” “anticipates,” “plans,” “likely,” “will,” “seeks,” “estimates” and variations of such words and similar expressions are intended to identify such forward-looking statements. This press release includes forward-looking statements that reflect the Company’s current views with respect to, among other things, its business, operations, financial performance, revenue, capital structure, the impact of the exchange offer and economic developments.

Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those projected or contemplated by our forward-looking statements due to various factors, including, among others: our dependence on the operating success of our operators; the amount of, and our ability to service, our indebtedness; covenants in our debt agreements that may restrict our ability to make investments, incur additional indebtedness and refinance indebtedness on favorable terms; the availability and cost of capital; our ability to raise capital through equity and debt financings or through the sale of assets; increases in market interest rates and inflation; our ability to meet the continued listing requirements of the NYSE American LLC and to maintain the listing of our securities thereon; the effect of increasing healthcare regulation and enforcement on our operators and the dependence of our operators on reimbursement from governmental and other third-party payors; the relatively illiquid nature of real estate investments; the impact of litigation and rising insurance costs on the business of our operators; the impact on us of litigation relating to our prior operation of our healthcare properties; the effect of our operators declaring bankruptcy, becoming insolvent or failing to pay rent as due; the ability of any of our operators in bankruptcy to reject unexpired lease obligations and to impede our ability to collect unpaid rent or interest during the pendency of a bankruptcy proceeding and retain security deposits for the debtor’s obligations; our ability to find replacement operators and the impact of unforeseen costs in acquiring new properties; epidemics or pandemics, including the COVID-19 pandemic, and the related impact on our tenants, operators and healthcare facilities; and other factors discussed from time to time in our news releases, public statements and documents filed by us with the Securities and Exchange Commission from time to time, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this press release, and we expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by applicable law.

Company Contact

Brent Morrison, CFA

Chief Executive Officer & President

Regional Health Properties, Inc.

Tel (678) 368-4402

Brent.morrison@regionalhealthproperties.com

REGIONAL HEALTH PROPERTIES, INC.STATEMENT OF OPERATIONS (Amounts in thousands, except per share data)(Unaudited)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
Revenues:
Patient care revenues		$	2,136			$	7,769			$	6,577			$	14,650
Rental revenues			1,739				3,000				5,170				10,326
Management fees			263				255				788				774
Other revenues			—				6				107				20
Total revenues			4,138				11,030				12,642				25,770
Expenses:
Patient care expense			2,313				7,476				7,010				14,040
Facility rent expense			149				1,451				446				4,725
Cost of management fees			156				140				442				459
Depreciation and amortization			526				600				1,738				1,819
General and administrative expense			972				1,378				3,190				3,432
Doubtful accounts expense			229				1,515				269				3,742
Other operating expenses			197				441				511				1,409
Total expenses			4,542				13,001				13,606				29,626
Income/(loss) from operations			(404	)			(1,971	)			(964	)			(3,856	)
Other expense:
Interest expense, net			708				564				2,066				1,855
Other expense, net			(139	)			(2,164	)			620				(1,088	)
Total other (income) expense, net			569				(1,600	)			2,686				767
Net loss		$	(973	)		$	(371	)		$	(3,650	)		$	(4,623	)
Preferred stock dividends - undeclared			—				(2,249	)			—				(6,748	)
Preferred stock dividends - gain on extinguishment			—				—				43,395				—
Net profit (loss) attributable to Regional Health Properties, Inc. common stockholders		$	(973	)		$	(2,620	)		$	39,745			$	(11,371	)
Net profit (loss) per share of common stock attributable to Regional Health Properties, Inc.
Basic:		$	(0.52	)		$	(1.48	)		$	21.18			$	(6.40	)
Diluted:		$	(0.52	)		$	(1.48	)		$	21.18			$	(6.40	)
Weighted average shares of common stock outstanding:
Basic:			1,883,028				1,768,720				1,876,138				1,775,637
Diluted:			1,883,028				1,768,720				1,876,138				1,775,637

REGIONAL HEALTH PROPERTIES, INC.

BALANCE SHEET

(Amounts in thousands)

(Unaudited)

		September 30, 2023				December 31, 2022
ASSETS
Property and equipment, net		$	45,806			$	46,611
Cash			1,427				843
Restricted cash			3,208				3,066
Accounts receivable, net of allowances of $1,579 and $1,298			2,035				6,289
Prepaid expenses and other			903				746
Notes receivable			1,060				1,099
Intangible assets - bed licenses			2,471				2,471
Intangible assets - lease rights, net			92				110
Right-of-use operating lease assets			2,588				2,848
Goodwill			1,585				1,585
Lease deposits and other deposits			4				—
Straight-line rent receivable			2,830				2,912
Total assets		$	64,009			$	68,580
LIABILITIES AND EQUITY
Senior debt, net		$	44,208			$	45,163
Bonds, net			5,989				6,120
Other debt, net			1,181				895
Accounts payable			2,783				3,293
Accrued expenses			4,806				5,036
Operating lease obligation			2,948				3,226
Other liabilities			1,707				1,131
Total liabilities			63,622				64,864
Stockholders’ equity:
Common stock and additional paid-in capital			63,023				62,702
Preferred stock, Series A			426				62,423
Preferred stock, Series B			18,602				—
Accumulated deficit			(81,664	)			(121,409	)
Total stockholders’ equity			387				3,716
Total liabilities and stockholders’ equity		$	64,009			$	68,580

REGIONAL HEALTH PROPERTIES, INC.DEBT SUMMARY(Amounts in thousands)(Unaudited)

										September 30, 2023
		Maturity				Interest Rate				Principal				% of Principal				Deferred financing costs				Unamortized discount on bonds				Net Carrying Value
Total Fixed Rate Debt			2042				4.28	%			44,569				85.0	%			(767	)			(115	)			43,687
Total Floating Rate Debt			2036				9.92	%			7,895				15.0	%			(204	)			-				7,691
Total										$	52,464				100.0	%		$	(971	)		$	(115	)		$	51,378

Calculation of Non-GAAP Financial Measures

This press release presents information about EBITDA adjusted EBITDA and EBITDAR, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding certain items that may not be indicative of its recurring core business operating results. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to the Company’s historical performance. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making.

These non-GAAP financial measures are presented for supplemental informational purposes only. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, GAAP financial measures. These non-GAAP financial measures may differ from the non-GAAP financial measures used by other companies. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measure is provided below for each of the fiscal periods indicated.

A reconciliation of EBITDA and adjusted EBITDA is as follows:

		Three MonthsEnded September 30,								Nine MonthsEnded September 30,
		2023				2022				2023				2022
Net income (loss)			(973	)			(371	)			(3,650	)			(4,623	)
Depreciation and amortization			526				600				1,738				1,819
Interest expense, net			708				564				2,066				1,855
Amortization of employee stock compensation			86				58				321				173
EBITDA			347				851				475				(776	)
Bad debt - straight line write off			229				1,383				-				3,760
Bad debt - Increase in provision			-				150				278				150
Discontinuted operations			(200	)			(2,321	)			(231	)			(2,321	)
Gain on Foster leases modification			-				(140	)			-				(140	)
Expenses related to preferred stock recapitalization			95				158				768				1,232
Other one-time costs			6				63				270				92
Project costs			70				-				237				-
Tail insurance on legacy facilities			127				-				512				-
One-time income adjustment - quality incentive program			-				-				-				-
Adjusted EBITDA from operations		$	674			$	144			$	2,309			$	1,997

1 Adjusted EBITDA is a non-GAAP financial measure. See “Calculation of Non-GAAP Financial Measures” for important additional information.2 EBITDA is a non-GAAP financial measure. See “Calculation of Non-GAAP Financial Measures” for important additional information. 3 EBITDAR is a non-GAAP financial measure.