Regional Health Properties Reports First Quarter 2021 Financial Results

Rhea-AI Summary

Regional Health Properties (NYSE American: RHE, RHEPA) reported Q1 2021 results, revealing a net income of $21,000, a notable improvement from a net loss of $14,000 in the previous year. The company ended the quarter with $6.2 million in unrestricted cash and collected 97.2% of its rent, signaling strong cash flow. However, total rental revenues decreased by 5.0% to $4.1 million due to lease terminations. Management initiated refinancing on six properties to reduce interest rates and improve cash flow, aiming for growth as occupancy rates recover from COVID-19 disruptions.

Positive

• Net income increased to $21,000 from a net loss of $14,000 year-over-year.
• Unrestricted cash improved to $6.2 million, up from $4.2 million.
• 97.2% of first-quarter contractual cash rent was collected.

Negative

• Total rental revenues decreased by 5.0% to $4.1 million compared to Q1 2020.

Regional Health Properties, Inc. (NYSE American: RHE) (NYSE American: RHEpA), a self-managed healthcare real estate investment company that invests primarily in real estate purposed for senior living and long-term care, reported results for the quarter ended March 31, 2021.

Business Update

• Ended the quarter with $6.2 million of unrestricted cash

• Initiated refinancing efforts on six properties with the goal of lowering interest rates and extending maturity dates

• Collected 97.2% of first quarter 2021 contractual cash rent

Brent Morrison, Regional Health Properties’ Chief Executive Officer and President, commented, “We are pleased to report a slight increase to our Operator’s occupancy levels and improvements in our rent collections. Subsequent to quarter-end, we are seeing further positive improvement in occupancy levels and continue to remain hopeful that occupancy rates will continue to grow as the affects from COVID-19 are further behind us.” Ben Waites, Regional’s Chief Financial Officer added, “The opportunities to refinance some of our senior debt secured by U.S. Department of Housing and Urban Development (HUD) and non-HUD properties are moving along. Other capital structure improvements are also underway that should allow the Company to move into a growth mode and take advantage of opportunities presented by the COVID-19 disruption.”

Management periodically monitors a number of facility performance metrics, including rent coverages both before and after management fees. In the first quarter of 2021, the Company’s portfolio rent coverage before management fees was 1.65 x and rent coverage after management fees was 1.17 x. Occupancy and skilled mix for the Company’s portfolio was 68.6% and 29.6% for the first quarter of 2021, respectively. These data exclude the impact of three managed facilities located in Ohio.

Rent Collections and Operator Changes

As of the quarter ended March 31, 2021, we collected 97.2% of contractual cash due for the first quarter of 2021.

As announced in December, we terminated a lease with the operator of two facilities located in Georgia. One facility was transitioned to Empire Care Centers, a new operator to Regional and the second building (the “Tara Facility”) is being managed by Vero Health Care, a current leasee of the company. Operating results for the first quarter of 2021 for these facilities are encouraging.

Summary of Financial Results for the Three Months Ended March 31, 2021

Total rental revenues in the first quarter of 2021 decreased 5.0% to $4.1 million, from $4.3 million in the first quarter of 2020. The decrease is primarily a result of the agreement to terminate the subleases for two skilled nursing facilities in the fourth quarter of 2020 (the “Wellington Transition”).

Patient care revenues for our new healthcare services are from the operations of the Tara Facility as a part of the Wellington Transition. Effective January 1, 2021, the Company began to operate this 134 bed skilled nursing facility. Patient care expense of $2.2 million for the three months ended March 31, 2021, relate to the costs of operating the Tara Facility.

In early 2020, the Company began on-going efforts to investigate alternatives to retire or refinance our outstanding debt of Series A Preferred Stock through privately negotiated transactions, open market repurchases, redemptions, exchange offers, tender offers, or otherwise. Costs associated with these efforts have been expensed as incurred in Other expense, net and were approximately $394,000 and approximately $144,000 for the three months ended March 31, 2021 and March 31, 2020, respectively.

General and administrative costs increased 18.1%, to $1.0 million for the first quarter of 2021, compared with $0.9 million for the same period in 2020. The increase for the quarter is primarily related to $135,000 in management consulting services incurred for the Tara Facility.

Interest expense decreased slightly by $28,000, or 3.9%, to $687,000 for the first quarter of 2021 compared with $715,000 for the same period in 2020. The current quarter decrease is due to normal amortization of the outstanding debt balances.

Loss from discontinued operations, net of tax, for the first quarter of 2021, was $13,000 compared to $37,000 for the same period of the prior year.

Net income attributable to Regional Health Properties, Inc.’s common stockholders in the first quarter of 2021 was $21,000 compared with a net loss of $14,000 for the first quarter of 2020.

Cash at March 31, 2021, totaled $6.2 million compared with $4.2 million at December 31, 2020. The increase in cash is primarily due to approximately $3.1 million of lease termination cash collected partially offset by approximately $1.0 million paid for past due bed taxes, all related to the Wellington Transition. Restricted cash at March 31, 2021, totaled $3.0 million compared to $3.3 million at December 31, 2020. Total debt outstanding amounted to $54.4 million at March 31, 2021 and December 31, 2020 (net of $1.2 million and $1.4 million of deferred financing costs at March 31, 2021 and December 31, 2020, respectively).

About Regional Health Properties

Regional Health Properties, Inc. (NYSE American: RHE) (NYSE American: RHEpA) is the successor to AdCare Health Systems, Inc., and is a self-managed healthcare real estate investment company that invests primarily in real estate purposed for senior living and long-term healthcare through facility lease and sub-lease transactions.

Regional currently owns, leases, manages for third parties and operates, 24 facilities (12 of which are owned by Regional, eight of which are leased by Regional, three of which are managed by Regional for third parties and one of which is leased and operated by Regional). Effective January 1, 2021, the Company commenced operation of one previously subleased facility as a portfolio stabilization measure.

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. Statements in this press release regarding future events and developments and our future performance, as well as management’s expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements.

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 significant 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; 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 na

FAQ

What were Regional Health Properties' financial results for Q1 2021?

Regional Health Properties reported a net income of $21,000 for Q1 2021, compared to a net loss of $14,000 in Q1 2020.

How much cash does Regional Health Properties have as of March 31, 2021?

As of March 31, 2021, Regional Health Properties had $6.2 million in unrestricted cash.

What is the current occupancy rate for Regional Health Properties?

The occupancy rate for Regional Health Properties' portfolio was 68.6% for Q1 2021.

How did Regional Health Properties perform in rent collections for Q1 2021?

The company collected 97.2% of its first-quarter contractual cash rent for 2021.

What is the rental revenue trend for Regional Health Properties?

Total rental revenues decreased by 5.0% to $4.1 million in Q1 2021 compared to $4.3 million in Q1 2020.