8-K
REGIONAL HEALTH PROPERTIES, INC (RHEP)
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): August 20, 2020
Regional Health Properties, Inc.
(Exact Name of Registrant as Specified in Charter)
| Georgia | 001-33135 | 81-5166048 |
|---|---|---|
| (State or Other Jurisdiction of<br><br><br>Incorporation) | (Commission<br><br><br>File Number) | (I.R.S. Employer<br><br><br>Identification No.) |
454 Satellite Boulevard, NW
Suite 100
Suwanee, Georgia 30024
(Address of Principal Executive Offices, and Zip Code)
(678) 869-5116
(Registrant’s telephone number, including area code)
Not applicable.
(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 (see General Instruction A.2. below):
| ☐ | 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 Stock, no par value | RHE | NYSE American |
| 10.875% Series A Cumulative Redeemable Preferred Stock, no par value | RHE-PA | NYSE American |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
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 2.02Results of Operations and Financial Condition.
On August 20, 2020, Regional Health Properties, Inc. (the “Company”) reported its results of operations for the three and six months ended June 30, 2020. A copy of the press release dated August 20, 2020, is attached hereto as Exhibit 99.1.
The information provided pursuant to this Item 2.02 of this Current Report, including Exhibit 99.1, is “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, and shall not be incorporated by reference in any filing made by the Company under the Exchange Act or the Securities Act of 1933, as amended, except to the extent expressly set forth by specific reference in any such filings.
Item 9.01Financial Statements and Exhibits.
(d)Exhibits.
99.1Press Release dated August 20, 2020.
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.
| Date: | August 20, 2020 | REGIONAL HEALTH PROPERTIES, INC. |
|---|---|---|
| /s/ Brent Morrison | ||
| Brent Morrison | ||
| Chief Executive Officer and President |
3
rhe-ex991_7.htm
Exhibit 99.1
Regional Health Properties Reports Second Quarter 2020 Financial Results
ATLANTA, GA, August 20, 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 June 30, 2020.
Brent Morrison, Regional Health Properties’ Chief Executive Officer, stated “Our operators continue to perform well in light of navigating through a healthcare crisis. The Federal Government has provided nursing home operators with much needed stimulus to weather the operating headwinds brought on by the COVID-19 pandemic. We appreciate the hard work from our operators and intend to work with them until the operating environment goes back to normal.”
See the Company’s recently filed Form 10-Q for additional details on the current and potential impact of COVID-19 on the business.
Clinton Cain, our former Senior Vice President and Interim Chief Financial Officer, resigned from all of his positions at the company. He has agreed to continue serving the company in a consulting role to facilitate a smooth transition as we identify the next finance executive for Regional Health Properties. Mr. Morrison added, “Clinton served our company well over the last nine years in a variety of financial and leadership roles. On behalf of the board, I want to thank him for his financial stewardship and many significant contributions during his tenure. We wish him all the best.”
Management periodically monitors a number of facility performance metrics, including rent coverages both before and after management fees. For the 12 months ended June 30, 2020, the Company’s portfolio rent coverage before management fees was 1.55x and rent coverage after management fees was 1.20x. Occupancy and skilled mix for the Company’s portfolio were 75.1% and 28.0% respectively, for the 12 months ended June 30, 2020. These data exclude the impact of three managed facilities located in Ohio.
Summary of Financial Results for the Three Months Ended June 30, 2020
Total revenues in the second quarter of 2020 decreased 14.4% to $4.5 million, from $5.3 million in the second quarter of 2019. The decrease is a result of four facilities sold during the third quarter of 2019. The Company generally recognizes all rental revenues on a straight-line rent accrual basis.
General and administrative costs decreased 20.2%, to $0.7 million for the three months ended June 30, 2020, compared to $0.9 million for the same period in 2019. For both the current and prior year periods, general and administrative costs include minimal stock-based compensation expense.
Interest expense decreased by $1.0 million, or 60.3%, to $0.7 million for the second quarter of 2020 compared to $1.7 million for the same period in 2019. The decrease is mainly due to the payoff of the Pinecone and Congressional Bank loans in the third quarter of 2019.
Net loss attributable to Regional Health Properties, Inc.’s common stockholders in the second quarter of 2020 was $1.8 million, or $1.09 per basic and diluted share, compared to a net loss of $3.5 million, or $2.07 per basic and diluted share in the prior year period.
Cash at June 30, 2020, totaled $4.3 million compared to $4.4 million at December 31, 2019. Restricted cash at June 30, 2020, totaled $2.9 million compared to $3.7 million at December 31, 2019. Total debt outstanding at June 30, 2020 amounted to $55.1 million compared to $55.4 million at December 31, 2019 (net of $1.3 million and $1.4 million of deferred financing costs at June 30, 2020 and December 31, 2019, respectively).
About Regional Health Properties
Regional Health Properties, Inc. (NYSE American: RHE) (NYSE American: RHEpA) 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 or manages for third parties 24 facilities (12 of which are owned by Regional, nine of which are leased by Regional and three of which are managed by Regional for third parties).
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 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; the impact of COVID-19 on our business and the business of our operators, including without limitation, the extent and duration of the COVID-19 pandemic, increased costs experienced by our operators in connection therewith, and the extent to which government support may be available to our operators to offset such costs and the conditions related thereto; 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 Contacts | Investor Relations |
|---|---|
| Brent Morrison | Brett Maas |
| Chief Executive Officer | Managing Partner |
| Regional Health Properties, Inc. | Hayden IR |
| Tel (678) 368-4402 | Tel (646) 536-7331 |
| brent.morrison@regionalhealthproperties.com | brett@haydenir.com |
REGIONAL HEALTH PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in 000’s)
| December 31, | |||||
|---|---|---|---|---|---|
| ASSETS | 2019 | ||||
| Property and equipment, net | 53,528 | $ | 54,672 | ||
| Cash | 4,295 | 4,383 | |||
| Restricted cash | 2,882 | 3,655 | |||
| Accounts receivable, net of allowance of 581 and 615 | 2,183 | 963 | |||
| Prepaid expenses and other | 551 | 249 | |||
| Notes receivable | 817 | 840 | |||
| Intangible assets - bed licenses | 2,471 | 2,471 | |||
| Intangible assets - lease rights, net | 218 | 462 | |||
| Right-of-use operating lease assets | 35,547 | 37,287 | |||
| Goodwill | 1,585 | 1,585 | |||
| Lease deposits and other deposits | 517 | 517 | |||
| Straight-line rent receivable | 7,205 | 6,674 | |||
| Total assets | 111,799 | $ | 113,758 | ||
| LIABILITIES AND EQUITY | |||||
| Senior debt, net | 47,812 | $ | 48,415 | ||
| Bonds, net | 6,317 | 6,409 | |||
| Other debt, net | 1,016 | 539 | |||
| Accounts payable | 3,038 | 3,699 | |||
| Accrued expenses | 2,480 | 2,613 | |||
| Operating lease obligation | 37,632 | 39,262 | |||
| Other liabilities | 1,339 | 1,078 | |||
| Total liabilities | 99,634 | 102,015 | |||
| Stockholders' equity: | |||||
| Common stock and additional paid-in capital, no par value; 55,000 | |||||
| shares authorized; 1,688 shares issued and outstanding at | |||||
| June 30, 2020 and December 31, 2019 | 62,016 | 61,992 | |||
| Preferred stock, no par value; 5,000 shares authorized; 2,812 | |||||
| shares issued and outstanding, redemption amount 70,288 | |||||
| at June 30, 2020 and December 31, 2019 | 62,423 | 62,423 | |||
| Accumulated deficit | (112,274 | ) | (112,672 | ) | |
| Total stockholders' equity | 12,165 | 11,743 | |||
| Total liabilities and stockholders' equity | 111,799 | $ | 113,758 |
All values are in US Dollars.
REGIONAL HEALTH PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in 000’s, except per share data)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Revenues: | ||||||||||||
| Rental revenues | $ | 4,293 | $ | 5,018 | $ | 8,590 | $ | 10,156 | ||||
| Management fees | 244 | 238 | 488 | 477 | ||||||||
| Other revenues | 2 | 45 | 9 | 92 | ||||||||
| Total revenues | 4,539 | 5,301 | 9,087 | 10,725 | ||||||||
| Expenses: | ||||||||||||
| Facility rent expense | 1,639 | 1,640 | 3,279 | 3,366 | ||||||||
| Cost of management fees | 174 | 160 | 325 | 319 | ||||||||
| Depreciation and amortization | 769 | 841 | 1,545 | 1,864 | ||||||||
| General and administrative expenses | 714 | 895 | 1,591 | 1,821 | ||||||||
| Recovery for doubtful accounts | (135 | ) | (74 | ) | (137 | ) | (246 | ) | ||||
| Other operating expenses | 297 | 222 | 521 | 630 | ||||||||
| Total expenses | 3,458 | 3,684 | 7,124 | 7,754 | ||||||||
| Income from operations | 1,081 | 1,617 | 1,963 | 2,971 | ||||||||
| Other expense (income): | ||||||||||||
| Interest expense, net | 684 | 1,724 | 1,399 | 3,378 | ||||||||
| Loss on extinguishment of debt | - | 1,221 | - | 1,554 | ||||||||
| Gain on disposal of assets | - | - | - | (690 | ) | |||||||
| Other expense (income), net | (9 | ) | 47 | 135 | 54 | |||||||
| Total other expense, net | 675 | 2,992 | 1,534 | 4,296 | ||||||||
| Income (loss) from continuing operations before income taxes | 406 | (1,375 | ) | 429 | (1,325 | ) | ||||||
| Income tax expense | - | - | - | 44 | ||||||||
| Income (loss) from continuing operations | 406 | (1,375 | ) | 429 | (1,369 | ) | ||||||
| Income (loss) from discontinued operations, net of tax | 6 | 132 | (31 | ) | 310 | |||||||
| Net Income (loss) | 412 | (1,243 | ) | 398 | (1,059 | ) | ||||||
| Preferred stock dividends - undeclared | (2,249 | ) | (2,249 | ) | (4,498 | ) | (4,498 | ) | ||||
| Net loss attributable to Regional Health Properties, Inc. | ||||||||||||
| Common Stockholders | $ | (1,837 | ) | $ | (3,492 | ) | $ | (4,100 | ) | $ | (5,557 | ) |
| Net (loss) income per share of common stock attributable to | ||||||||||||
| Regional Health Properties, Inc. | ||||||||||||
| Basic and diluted: | ||||||||||||
| Continuing operations | $ | (1.09 | ) | $ | (2.14 | ) | $ | (2.41 | ) | $ | (3.47 | ) |
| Discontinued operations | $ | 0.00 | $ | 0.07 | $ | (0.02 | ) | $ | 0.18 | |||
| $ | (1.09 | ) | $ | (2.07 | ) | $ | (2.43 | ) | $ | (3.29 | ) | |
| Weighted average shares of common stock outstanding: | ||||||||||||
| Basic and diluted | 1,688 | 1,688 | 1,688 | 1,688 |
REGIONAL HEALTH PROPERTIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL OPERATING METRICS (1)
| Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | |||||
|---|---|---|---|---|---|---|---|---|
| Portfolio Operating Metrics (1) | September 30, 2019 | December 31, 2019 | March 31, 2020 | June 30, 2020 | ||||
| Occupancy % | 76.4% | 76.5% | 76.3% | 75.1% | ||||
| Quality Mix (2) | 28.0% | 27.9% | 27.7% | 28.0% | ||||
| Rent Coverage Before Management Fees (3) | 1.46 | 1.57 | 1.59 | 1.55 | ||||
| Rent Coverage After Management Fees (3) | 1.08 | 1.18 | 1.21 | 1.20 | ||||
| (1) Excludes three managed facilities in Ohio. | ||||||||
| (2) Quality Mix refers to all payor types less Medicaid. | ||||||||
| (3) EBITDAR coverage and EBITDARM coverage include information provided by our tenants. The Company has not independently verified | ||||||||
| this information, but have no reason to believe such information to be inaccurate in any material respect. |