Selectis Health Reports Second Quarter 2021 Financial Results

Rhea-AI Summary

Selectis Health, Inc. (OTC: GBCS) reported a net loss of $(686,280) or $(0.03) per diluted share for Q2 2021, compared to net income of $1,116,055 or $0.04 per diluted share one year prior. Despite this, total revenues increased by 17.2% to $6.01 million in Q2 2021 from $5.13 million in Q2 2020. The company completed a significant rebranding and transition of its operations, increasing occupancy by 30% at its independent living facility. However, the impact of COVID-19 and unexpected repair costs have negatively affected census and staffing operations.

Positive

• 17.2% revenue growth year-over-year, reaching $6.01 million in Q2 2021.
• Increased occupancy by 30% at the independent living facility.
• Successful completion of a rebranding to align with the business model.
• Eliminated outside ownership by purchasing remaining 15% of a facility.

Negative

• Net loss of $(686,280) in Q2 2021, a significant decline from $1,116,055 profit in Q2 2020.
• Incurred $482,744 in agency staffing costs due to nursing shortages.
• One-time legal fees of $310,586 related to lease terminations and litigation.
• Continuous losses from the newly opened Park Place facility until CMS certification is granted.

Greenwood Village, Colorado, Aug. 16, 2021 (GLOBE NEWSWIRE) -- Selectis Health, Inc f/k/a Global Healthcare REIT, Inc. (OTC: GBCS) ("Selectis" or the "Company") today reported a Net Income (Loss) for the second quarter of 2021 of $(686,280), or $(0.03) per diluted share. Total revenue increased to $6.01 million for the second quarter of 2021 compared to $5.13 million for the same period of 2020.

SECOND QUARTER HIGHLIGHTS

• Record revenue of $6,012,037 in 2Q21 versus revenue of $5,130,465 in 2Q20, a growth rate of 17.2% year-over-year;
• Net Income (Loss) of $(686,280) in 2Q21 versus Net Income of $1,116,055 in 2Q20;
• Earnings (Loss) per Share of $(0.03) per share in 2Q21 versus Earnings (Loss) per Share of $0.04 in 2Q20;
• Completed rebranding to Selectis Health, Inc. subject to FINRA Approval;
• Completed transfer to new accounting software;
• Executed agreements to transitioned operations from two lessees in Georgia;
• Shareholder approval of a 1-for-10 reverse stock split;
• Increased occupancy 30% at the independent living facility, which has continued to increase into the third quarter;
• Purchased remaining 15% of non-controlling interest of Goodwill Hunting, LLC facility;
• Hired new Controller;
• Hired additional Corporate Operations Staff;
• The Company replaced three facility Executive Directors and three Directors of Nursing, to realign all facilities with the current direction of operations;
• Completion of large-scale, Koi Pond water-feature at Continuing Care Retirement Community in Tulsa, Oklahoma;

“During the second quarter of 2021 we continued to move the business forward. We faced unexpected repairs due to additional weather events which affected our census. During this unprecedented time, we incurred several, one-time, cashless expenses along with higher than usual legal fees. However, we executed agreements to take over operations at both Sparta and Warrenton in Georgia. Long-term, this will allow the Company to maintain absolute control over those properties rather than deal with problematic third-party operators,” said Lance Baller, CEO of Selectis. “The Company also completed it’s shareholder meeting which achieved the approval of revised Articles of Incorporation, approval for a 1-for-10 reverse stock split, rebranding of name to better align with our business model. We also completed the purchase of the 15% Non-Controlling Interest in Goodwill Hunting, LLC which eliminates any outside ownership in any of our facilities. We incurred one-time transactional expenses, primarily professional fees, to accomplish these changes, which also negatively impacted our Q2 results.”

“The underlying challenge, for the second quarter, was that our census coupled with the necessary repairs from the extreme weather event in Oklahoma, limited our available open beds for our censuses. We were able to largely keep COVID out of our facilities until December 2020. When COVID finally entered our buildings, we faced several obstacles: first, was dealing with patients and the necessary steps to quarantine and care for them. Second was a large decrease in elective surgeries, which directly affected our therapy revenue, as therapy accounts for the majority of our Medicare billing. Third, and just as significant, was staffing. Our industry has been impacted more so than others due to COVID and we have experienced a harder-than-usual time trying to get direct nursing staffing in our buildings and were forced to rely heavily on outside agency staffing for much of the first half of the year, which is considerably more expensive than our regular staffing cost,” said Randy Barker, President and COO of Selectis. “Additionally, management has replaced three Executive Directors and three Directors of Nursing as part of the operations programs that have been implemented to increase admission rates and reduce the dependency on agency staffing. We believe these steps were necessary to improve our financial and operating conditions at our facilities. I am pleased with the progress that we have made and are making with increasing our censuses and reducing agency headcount. We are targeting to have all repairs and concurrent remodels in the affected facilities, completed by the end of August 2021.”

Total Revenue

For the three months ended June 30, 2021, total revenue increased 17.2% to $6.01 million, compared to $5.13 million for the comparable period in 2020. The higher total revenue reflects our focus on our transition of our business model.

Net Income

For the three months ended June 30, 2021, net income (loss) was $(686,280), or $(0.03) per diluted share, compared to net income of $1,116,055, or $0.04 per diluted share, for the comparable period of 2020. The Company took a non-cash impairment charge on the future termination of leases for the Sparta and Warrenton, GA facilities of $95,717, in the second quarter due to the accounting requirements for straight-line lease expenses and pending termination of agreements. The company also incurred higher than usual legal expenses in the second quarter, totaling $310,586, primarily due to the one-time lease termination litigations and operator-initiated bankruptcy cases in Georgia. The Company also incurred one-time expenses in regard to its shareholder meeting, which included printing and mailings, legal fees, hosting fees, and all other proxy services. Additionally, due to COVID the company faced shortages of nursing staffing and incurred $482,744 in agency staffing for the second quarter.

As anticipated, the newly opened Park Place facility continues to incur losses as the Company waits for CMS certification and approval to accept and care for Medicare and Medicaid patients. For the quarter, Park Place incurred a $231,270 loss. This is tracking very similar to our other facilities as we reopened them. Management anticipated this facility to continue to generate negative net income until the certification is granted. Through our wholly-owned operating subsidiary, the Company has a $500,000 line of credit in place to cover expenses incurred at this facility.

General and Administrative Expense Ratio

For the three months ended June 30, 2021, the G&A ratio was 15.1% compared to 7.2% in 2020. This change reflects increased cost of operating healthcare facilities, rather than simply renting to tenants. The G&A expenses include all costs except dietary wages, nursing wages, maintenance wages, and therapy wages.

Balance Sheet

Cash and investments at the Company amounted to $3.71 million as of June 30, 2021, compared to $4.00 million as of December 31, 2020.

Cash Flow

Operating cash flow used for the three months ended June 30, 2021, amounted to ($642,389), compared to $1.41 million for the comparable period of 2020. This is primarily due to the lower than anticipated census due to lingering effects of COVID, the inclement weather in late winter and the correlated construction to repair the facilities, and a handful of paper transactions that were discovered during the accounting software transition. Many of these costs were one-time expenses.

Conference Call

Management will host a conference call to discuss Selectis Health’s second quarter results at 4:15 P.M. Eastern Time on Monday, August 16, 2021. The number to call for the interactive teleconference is 1-877-705-6003 and the confirmation number is 13722498. A telephonic replay of the call will be available after 6:00 P.M. Eastern Daylight Time on the same day through Monday, August 30, 2021, by dialing (844) 512-2921 and entering the confirmation number 13722498.

SUMMARY OF SECOND QUARTER RESULTS

GLOBAL HEALTHCARE REIT, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

		June 30, 2021				December 31, 2020
		(Unaudited)
ASSETS
Current Assets
Cash and Cash Equivalents		$	3,255,478			$	3,567,437
Restricted Cash			430,505				410,866
Accounts Receivable, Net			3,234,343				1,931,569
Prepaid Expenses and Other			734,028				682,949
Investments in Debt Securities			24,387				24,387
Total Current Assets			7,678,741				6,617,208
Long Term Assets
Property and Equipment, Net			37,782,709				38,238,367
Goodwill			1,076,908				1,076,908
Total Assets		$	46,538,358			$	45,932,483
LIABILITIES AND EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities			3,964,902				3,196,178
Accounts Payable – Related Parties			81,576				9,900
Dividends Payable			-				7,500
Current Maturities of Long-Term Debt, Net of Discount of $26,002 and $1,714, respectively			7,197,174				19,299,156
Debt – Related Parties, Net of discount of $13,153 and $3,234, respectively			1,121,766				1,121,766
Total Current Liabilities			12,365,418				23,634,500
Debt, Net of discount of $347,081 and $450,879, respectively			31,180,075				18,830,444
Lease Security Deposit			253,100				251,600
Total Liabilities			43,798,593				42,716,544
Commitments and Contingencies
Equity
Preferred Stock:
Series A - No Dividends, $2.00 Stated Value, Non-Voting; 2,000,000 Shares Authorized, 200,500 Shares Issued and Outstanding			401,000				401,000
Series D - 8% Cumulative, Convertible, $1.00 Stated Value, Non-Voting; 1,000,000 Shares Authorized, 375,000 Shares Issued and Outstanding			375,000				375,000
Common Stock - $0.05 Par Value; 50,000,000 Shares Authorized, 26,924,949 and 26,866,379 Shares Issued and Outstanding at June 30, 2021, and December 31, 2020, respectively			1,346,248				1,343,319
Additional Paid-In Capital			10,099,641				10,331,065
Accumulated Deficit			(9,482,124	)			(9,036,400	)
Total Selectis Health, Inc. Stockholders’ Equity			2,739,765				3,413,984
Noncontrolling Interests			-				(198,045	)
Total Equity			2,739,765				3,215,939
Total Liabilities and Equity		$	46,538,358			$	45,932,483

GLOBAL HEALTHCARE REIT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

		Six Months Ended								Three Months Ended
		June 30,								June 30,
		2021				2020				2021				2020
Revenue
Rental Revenue		$	778,289			$	1,144,605			$	387,903			$	623,593
Healthcare Revenue			10,996,591				7,837,461				5,624,134				4,506,872
Total Revenue			11,774,880				8,982,066				6,012,037				5,130,465
Expenses
Property Taxes, Insurance and Other Operating			8,199,966				4,985,975				4,655,236				2,654,231
General and Administrative			3,010,823				715,770				912,496				372,707
Provision for Bad Debts			16,133				263,890				(8,001	)			57,282
Acquisition Costs			-				28,654				-				13,763
Depreciation and Amortization			851,266				768,103				450,243				380,885
Total Expenses			12,078,188				6,762,392				6,009,974				3,478,868
Income (Loss) from Operations			(303,308	)			2,219,674				2,063				1,651,597
Other Income (Expense)
Gain on Extinguishment of Debt			-				(80,400	)			-				(80,400	)
Interest Expense			1,193,724				1,116,571				650,181				611,301
Gain on Forgiveness of PPP Loan			(675,598	)			-				-				-
Other (Income) Expense			(401,360	)			-				30,662				-
Total Other (Income) Expense			116,766				1,036,171				680,843				530,901
Net Income (Loss)			(420,074	)			1,183,503				(678,780	)			1,120,696
Net (Income) Loss Attributable to Noncontrolling Interests			(10,650	)			1,152				-				2,859
Net Income (Loss) Attributable to Selectis Health, Inc.			(430,724	)			1,184,655				(678,780	)			1,123,555
Series D Preferred Dividends			(15,000	)			(15,000	)			(7,500	)			(7,500	)
Net Income (Loss) Attributable to Common Stockholders		$	(445,724	)		$	1,169,655			$	(686,280	)		$	1,116,055
Per Share Data:
Net Income (Loss) per Share Attributable to Common Stockholders:
Basic		$	(0.02	)		$	0.04			$	(0.03	)		$	0.04
Diluted		$	(0.02	)		$	0.04			$	(0.03	)		$	0.04
Weighted Average Common Shares Outstanding:
Basic			26,879,180				27,427,928				26,891,841				27,414,816
Diluted			26,879,180				27,810,428				26,891,841				27,797,316

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This earnings release and the Company’s accompanying oral remarks contain forward-looking statements regarding its 2021 guidance, as well as its plans, expectations, and the Company’s expectations regarding future developments. Actual results could differ materially due to numerous known and unknown risks as well as uncertainties. These risks and uncertainties are discussed under the headings “Forward-Looking Statements,” and “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

These reports can be accessed under the investor relations tab of the Company’s website or on the SEC’s website at sec.gov. Given these risks and uncertainties, the Company can give no assurances that its forward-looking statements will prove to be accurate, or that any other results or developments projected or contemplated by its forward-looking statements will in fact occur, and the Company cautions investors not to place undue reliance on these statements. All forward-looking statements in this release represent the Company’s judgment as of the date of this release, except as otherwise required by law, the Company disclaims any obligation to update any forward-looking statement to conform the statement to actual results or changes in its expectations.

For Further Information Contact:
Brandon Thall
investors@selectis.com

FAQ

What was Selectis Health's revenue for Q2 2021?

Selectis Health reported total revenue of $6.01 million for Q2 2021, a 17.2% increase compared to $5.13 million in Q2 2020.

What is Selectis Health's net income for Q2 2021?

Selectis Health recorded a net loss of $(686,280) in Q2 2021.

How did Selectis Health perform compared to the same quarter last year?

In Q2 2020, Selectis Health reported a net income of $1,116,055, contrasting with a net loss in Q2 2021.

What operational changes were made by Selectis Health recently?

Selectis Health completed a rebranding and took control of operations in Georgia, increasing occupancy rates.

What challenges did Selectis Health face in Q2 2021?

Selectis Health faced unexpected repair costs and staffing shortages due to COVID-19, impacting its operational census.