false000009679300000967932023-02-152023-02-15

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 15, 2023

 

 

SunLink Health Systems Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Ohio

001-12607

31-0621189

(State or Other Jurisdiction
of Incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

 

 

 

 

 

900 Circle 75 Parkway

Suite 690

 

Atlanta, Georgia

 

30339

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 770 933-7000

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class

 

Trading
Symbol(s)

 


Name of each exchange on which registered

Common Shares without par value Preferred Share Purchase Rights

 

SYY

 

NYSE American LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

Item 8.01 Other Events.

On February 15, 2023, the Company issued a press release announcing its fiscal 2023 second quarter results, a copy of which is attached as Exhibit 99.1 hereto and is incorporated by reference.

Item 9.01 Financial Statements and Exhibits.

Exhibits The following exhibit is filed with this report:

Exhibits 99.1 SunLink Health Systems, Inc. announces fiscal 2023 second quarter results.

Exhibit 104 Cover Page Interactive Data File (embedded within the online XBRL document)

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

SUNLINK HEALTH SYSTEMS, INC.

 

 

 

 

Date:

February 15, 2023

By:

/s/ Mark J. Stockslager

 

 

 

Name: Mark J. Stockslager
Title: Chief Financial Officer


 

 

 

 

 

 

 



Exhibit 99.1

NEWS RELEASE

Contact:

Robert M. Thornton, Jr.

Chief Executive Officer

(770) 933-7004

 

SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES FISCAL 2023

SECOND QUARTER RESULTS

 

ATLANTA, Georgia (February 15, 2023) – SunLink Health Systems, Inc. (NYSE American: SSY) today announced earnings from continuing operations of $2,052,000 ($0.29 per fully diluted share) for its second fiscal quarter ended December 31, 2022 compared to a loss from continuing operations of $477,000 (or a loss of $0.07 per fully diluted share) for the second fiscal quarter ended December 31, 2021. Net earnings for the quarter ended December 31, 2022 were $1,951,000 ($0.28 per fully diluted share) compared to a net loss of $593,000 (or a loss of $0.09 per fully diluted share) for the quarter ended December 31, 2021.

The fiscal quarter ended December 31, 2022, included recognition of net revenues of $2,615,000 from the reversal of reserves for certain sales taxes previously accrued by the Pharmacy Segment. The company determined during the quarter that, based upon discussions with and correspondence from taxing authorities and consultation with external legal counsel, it was more likely than not that such accrued sales taxes will not be payable.

The fiscal quarter ended December 31, 2021 included Provider Relief Funds (“PRF”) of $614,000 (pre-tax).

Consolidated net revenues for the quarters ended December 31, 2022 and 2021 were $14,392,000 and $10,411,000, respectively, an increase of 38.2% in the current year’s quarter compared to the comparable quarter of the prior fiscal year. Healthcare Services Segment net revenues increased 18.1% from the comparable fiscal quarter of the prior year due to increased hospital admissions and increased nursing home admissions this current quarter and Pharmacy Segment net revenues increased 47.7% from the comparable fiscal quarter of the prior fiscal year due to the recognition of income from the reversal of reserves for certain sales taxes previously accrued and increased retail and institutional pharmacy and Durable Medical Equipment (“DME”) sales in the fiscal quarter ended December 31, 2022.

SunLink reported operating profit for the quarter ended December 31, 2022 of $2,040,000 compared to an operating loss for the quarter ended December 31, 2021 of $1,072,000. The substantial increase in operating profit from last year’s comparable quarter was due to the previously mentioned recognition of income from reversal of the reserves for certain sales taxes previously accrued of $2,615,000. Excluding this adjustment, the resulting operating loss in the current year’s quarter would have been less than last year due to higher net revenues and slightly lower wages and benefits expense.

Loss from discontinued operations was $101,000 (or a loss of $0.01 per fully diluted share) for the quarter ended December 31, 2022 compared to a loss from discontinued operations of $116,000 (or $0.02 per fully diluted share) for the quarter ended December 31, 2021.

Earnings from continuing operations for the six months ended December 31, 2022 were $508,000 ($0.07 per fully diluted share) compared to earnings from continuing operations for the six months ended December 31, 2021 of $1,529,000 ($0.22 per fully diluted share). Net earnings for the six months ended December 31, 2022 were $393,000 ($0.06 per fully diluted share) compared to net earnings of $1,346,000 ($0.19 per fully diluted share) for the six months ended December 31, 2021.

The six months ended December 31, 2022 included recognition of income from reversal of certain sales taxes previously accrued by its Pharmacy Segment which resulted in a $2,615,000 increase to net revenues, as well as PRF of $61,000 (pre-tax). The six months ended December 31, 2021 included forgiveness of Paycheck Protection Plan (“PPP”) loans of $3,010,000 (pre-tax) and PRF of $614,000 (pre-tax).

Consolidated net revenues for the six months ended December 31, 2022 and 2021 were $25,429,000 and $20,936,000, respectively, an increase of 21.5% in the current year’s quarter compared to the comparable quarter of the prior fiscal year. Healthcare Services Segment net revenues increased 13.0% from the prior year due to increased hospital admissions, clinic visits and increased nursing home admissions this year, and the Pharmacy Segment net revenues increased 25.5% from the prior year due to the recognition of income from reversal of reserves for certain sales taxes previously accrued and increased retail and institutional pharmacy sales this year.

SunLink reported operating profit for the six months ended December 31, 2022 of $427,000 compared to an operating loss for the six months ended December 31, 2021 of $2,065,000. The operating profit from this year was due to the previously mentioned recognition of income from the reversal of reserves for certain sales taxes previously accrued of $2,615,000 in this year’s second fiscal quarter.

Loss from discontinued operations was $115,000 (or a loss of $0.02 per fully diluted share) for the six months ended December 31, 2022 compared to a loss from discontinued operations of $183,000 (or $0.03 per fully diluted share) for the six months ended December 31, 2021.

The company’s cash and cash equivalents on December 31, 2022 was $5,156,000, a decline of $1,638,000 from June 30, 2022, due to the six month’s operating loss and capital expenditures by both the Healthcare Service and Pharmacy Segments.

COVID-19 Pandemic

The Company continued to experience adverse effects of the COVID-19 pandemic and its aftermath of the COVID-19 pandemic for the last quarter and believes it will continue to affect its assets and operations in the foreseeable future. Our ability to make estimates of any continuing effect of the COVID-19 pandemic and its aftermath on revenues, expenses or changes in accounting judgments that have had or are reasonably likely to have a material effect on our financial statements is currently limited. The nature and extent of the continuing effect of the

COVID-19 pandemic and its aftermath on our balance sheet and results of operations will depend on the severity and length of the evolving strains of COVID-19; any further government actions and/or regulatory changes to address the continuing effect of the pandemic; especially those that affect our hospital, extended care, rehabilitation center, nursing home, clinics, and our pharmacy operations; existing and potential government assistance that may be provided; and the requirements of PRF, including our ability to retain such PRF received.

 

SunLink Health Systems, Inc. is the parent company of subsidiaries that own and operate healthcare properties and businesses in the Southeast. Each of the Company’s businesses is operated locally with a strategy of linking patients’ needs with healthcare professionals. For additional information on SunLink Health Systems, Inc., please visit the Company’s website.

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, statements regarding the company’s business strategy. These forward-looking statements are subject to certain risks, uncertainties, and other factors, which could cause actual results, performance, and achievements to differ materially from those anticipated. Certain of those risks, uncertainties and other factors are disclosed in more detail in the company’s Annual Report on Form 10-K for the year ended June 30, 2022 and other filings with the Securities and Exchange Commission which can be located at www.sec.gov.

- more –

SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES

FISCAL 2023 SECOND QUARTER RESULTS

Amounts in 000's, except per share

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

 

Three Months Ended December 31,

 

 

Six Months Ended December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

% of Net

 

 

 

 

 

% of Net

 

 

 

 

 

% of Net

 

 

 

 

 

% of Net

 

 

 

Amount

 

 

Revenues

 

 

Amount

 

 

Revenues

 

 

Amount

 

 

Revenues

 

 

Amount

 

 

Revenues

 

Net Revenues

 

$

14,392

 

 

 

100.0

%

 

$

10,411

 

 

 

100.0

%

 

$

25,429

 

 

 

100.0

%

 

$

20,936

 

 

 

100.0

%

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

4,518

 

 

 

31.4

%

 

 

4,016

 

 

 

38.6

%

 

 

8,887

 

 

 

34.9

%

 

 

8,089

 

 

 

38.6

%

Salaries, wages and benefits

 

 

4,667

 

 

 

32.4

%

 

 

4,789

 

 

 

46.0

%

 

 

9,997

 

 

 

39.3

%

 

 

9,487

 

 

 

45.3

%

Supplies

 

 

401

 

 

 

2.8

%

 

 

308

 

 

 

3.0

%

 

 

738

 

 

 

2.9

%

 

 

608

 

 

 

2.9

%

Purchased services

 

 

999

 

 

 

6.9

%

 

 

783

 

 

 

7.5

%

 

 

2,034

 

 

 

8.0

%

 

 

1,645

 

 

 

7.9

%

Other operating expenses

 

 

1,254

 

 

 

8.7

%

 

 

1,101

 

 

 

10.6

%

 

 

2,347

 

 

 

9.2

%

 

 

2,183

 

 

 

10.4

%

Rents and leases

 

 

126

 

 

 

0.9

%

 

 

120

 

 

 

1.2

%

 

 

244

 

 

 

1.0

%

 

 

290

 

 

 

1.4

%

Depreciation and amortization

 

 

387

 

 

 

2.7

%

 

 

366

 

 

 

3.5

%

 

 

755

 

 

 

3.0

%

 

 

699

 

 

 

3.3

%

Operating profit (loss)

 

 

2,040

 

 

 

14.2

%

 

 

(1,072

)

 

 

-10.3

%

 

 

427

 

 

 

1.7

%

 

 

(2,065

)

 

 

-9.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Income (expense) - net

 

 

9

 

 

 

0.1

%

 

 

(3

)

 

 

0.0

%

 

 

5

 

 

 

0.0

%

 

 

(17

)

 

 

-0.1

%

Forgiveness of PPP loans and accrued interest

 

 

0

 

 

 

0.0

%

 

 

0

 

 

 

0.0

%

 

 

0

 

 

 

0.0

%

 

 

3,010

 

 

 

14.4

%

Federal pandemic stimulus- provider relief funds

 

 

0

 

 

 

0.0

%

 

 

614

 

 

 

5.9

%

 

 

61

 

 

 

0.2

%

 

 

614

 

 

 

2.9

%

Gain on sale of assets

 

 

2

 

 

 

0.0

%

 

 

7

 

 

 

0.1

%

 

 

14

 

 

 

0.1

%

 

 

12

 

 

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (Loss) from Continuing Operations before

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Taxes

 

 

2,051

 

 

 

14.3

%

 

 

(454

)

 

 

-4.4

%

 

 

507

 

 

 

2.0

%

 

 

1,554

 

 

 

7.4

%

Income Tax (benefit) expense

 

 

(1

)

 

 

0.0

%

 

 

23

 

 

 

0.2

%

 

 

(1

)

 

 

0.0

%

 

 

25

 

 

 

0.1

%

Earnings (Loss) from Continuing Operations

 

 

2,052

 

 

 

14.3

%

 

 

(477

)

 

 

-4.6

%

 

 

508

 

 

 

2.0

%

 

 

1,529

 

 

 

7.3

%

Loss from Discontinued Operations, net of tax

 

 

(101

)

 

 

-0.7

%

 

 

(116

)

 

 

-1.1

%

 

 

(115

)

 

 

-0.5

%

 

 

(183

)

 

 

-0.9

%

Net Earnings (Loss)

 

$

1,951

 

 

 

13.6

%

 

$

(593

)

 

 

-5.7

%

 

$

393

 

 

 

1.5

%

 

$

1,346

 

 

 

6.4

%

Earnings (Loss) Per Share from Continuing Operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Basic

 

$

0.29

 

 

 

 

 

$

(0.07

)

 

 

 

 

$

0.07

 

 

 

 

 

$

0.22

 

 

 

 

    Diluted

 

$

0.29

 

 

 

 

 

$

(0.07

)

 

 

 

 

$

0.07

 

 

 

 

 

$

0.22

 

 

 

 

Earnings (Loss) Per Share from Discontinued Operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Basic

 

$

(0.01

)

 

 

 

 

$

(0.02

)

 

 

 

 

$

(0.02

)

 

 

 

 

$

(0.03

)

 

 

 

    Diluted

 

$

(0.01

)

 

 

 

 

$

(0.02

)

 

 

 

 

$

(0.02

)

 

 

 

 

$

(0.03

)

 

 

 

Net Earnings (Loss) Per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Basic

 

$

0.28

 

 

 

 

 

$

(0.09

)

 

 

 

 

$

0.06

 

 

 

 

 

$

0.19

 

 

 

 

    Diluted

 

$

0.28

 

 

 

 

 

$

(0.09

)

 

 

 

 

$

0.06

 

 

 

 

 

$

0.19

 

 

 

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Basic

 

 

7,031

 

 

 

 

 

 

6,947

 

 

 

 

 

 

7,007

 

 

 

 

 

 

6,935

 

 

 

 

    Diluted

 

 

7,033

 

 

 

 

 

 

6,947

 

 

 

 

 

 

7,010

 

 

 

 

 

 

7,099

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUMMARY BALANCE SHEETS

 

December 31,

 

 

June 30,

 

 

 

2022

 

 

2022

 

ASSETS

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

5,156

 

 

$

6,794

 

Receivable - net

 

 

4,475

 

 

 

4,624

 

Other Current Assets

 

 

5,393

 

 

 

5,397

 

Property Plant and Equipment, net

 

 

8,427

 

 

 

8,217

 

Long-term Assets

 

 

2,718

 

 

 

2,911

 

 

 

$

26,169

 

 

$

27,943

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Current Liabilities

 

$

5,633

 

 

$

7,691

 

Long-term Debt and Other Noncurrent Liabilities

 

 

975

 

 

 

1,132

 

Shareholders' Equity

 

 

19,561

 

 

 

19,120

 

 

 

$

26,169

 

 

$

27,943

 

 



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Document And Entity Information
Feb. 15, 2023
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Feb. 15, 2023
Entity Registrant Name SunLink Health Systems Inc.
Entity Central Index Key 0000096793
Entity Emerging Growth Company false
Securities Act File Number 001-12607
Entity Incorporation, State or Country Code OH
Entity Tax Identification Number 31-0621189
Entity Address, Address Line One 900 Circle 75 Parkway
Entity Address, Address Line Two Suite 690
Entity Address, City or Town Atlanta
Entity Address, State or Province GA
Entity Address, Postal Zip Code 30339
City Area Code 770
Local Phone Number 933-7000
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Shares without par value Preferred Share Purchase Rights
Trading Symbol SYY
Security Exchange Name NYSEAMER


This regulatory filing also includes additional resources:
ssy-ex99_1.pdf
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