ATLANTA, November 12, 2024--(BUSINESS WIRE)--SunLink Health Systems, Inc. (NYSE American: SSY) today announced a loss from continuing operations of $442,000 (or a loss of $0.06 per fully diluted share) for its first fiscal quarter ended September 30, 2024 compared to a loss from continuing operations of $428,000 (or a loss of $0.06 per fully diluted share) for the first fiscal quarter ended September 30, 2023. During the quarter ended September 30, 2024, the Company sold non-core assets for cash totaling $1,465,000, which resulted in an aggregate pre-tax gain of $694,000 in the quarter ended September 30, 2024.
Net loss for the quarter ended September 30, 2024 was $549,000 (or a loss of $0.08 per fully diluted share) compared to a net loss of $1,344,000 (or a loss of $0.19 per fully diluted share) for the quarter ended September 30, 2023. The net loss for the first fiscal quarter of 2024 included a loss from discontinued operations of $107,000 (or a loss of $0.02 per fully diluted share), which includes for the quarter an impairment loss of $44,000 on the sale of the real estate of Trace Regional Hospital, as discussed below, compared to a loss from discontinued operations of $916,000 (or a loss of $0.13 per fully diluted share) for the quarter ended September 30, 2023, substantially all of which relates to Trace Regional Hospital’s results.
The Company’s indirect subsidiary, Southern Health Corporation of Houston, Inc. ("Southern") which sold the operations of its Trace Regional Hospital in January 2024 and its Trace Extended Care & Rehab senior care facility in Houston, Mississippi in June 2024. The real estate of Trace Regional Hospital was retained by Southern and sold in October 2024 for approximately $1,932,000. In the fiscal quarter ended September 30, 2024 the Company recorded an impairment loss of $44,000 for transaction expenses incurred through the sale date.
Consolidated net revenues for the fiscal quarters ended September 30, 2024 and 2023 were $7,923,000 and $8,555,000, respectively, which consisted primarily of pharmacy net revenues. Pharmacy net revenues for the quarter ended September 30, 2024 decreased $632,000, or 7%, from the same period last year. Approximately half of this decrease was due to $321,000 of prior period sales tax refund claims received during the quarter ended September 30, 2023. The pharmacy business also had lower retail pharmacy scripts and durable medical equipment orders filled this year.
SunLink reported an operating loss for the quarter ended September 30, 2024 of $1,194,000 compared to an operating loss for the quarter ended September 30, 2023 of $450,000. The increased operating loss this year compared to last year resulted from the decreased net revenues and higher operating costs.
Business Strategy
The Board of Directors of SunLink believes management of the Company should, among other things, actively pursue one or more extraordinary corporate transactions, any of which transactions may involve merger or consolidation with a compatible third party, as a result of which the Company's shareholders may not hold a majority of the equity in, or otherwise control the resulting entity. The Company is seeking to achieve a merger or other transaction which, among other things, provides the potential for growth in revenue and profitability on what it believes is a reasonable risk/reward basis as well as an increase in size over which to spread the costs of public company status.
COVID-19 Pandemic
The Company continues to experience post-COVID-19 pandemic after-effects in its quarter and believes it will likely to continue experience these effects on its assets and operations in the foreseeable future particularly from salaries and wages pressure, workforce shortages, supply chain disruption and broad inflationary pressures. Our ability to make estimates of any such continuing effects on future revenues, expenses or changes in accounting judgments that have had or are reasonably likely to have a material effect on our financial statements is very limited, depending as they do on the severity and length thereof; as well as any further government actions and/or regulatory changes intended to address such effects.
SunLink Health Systems, Inc. is the parent company of subsidiaries that own and operate a pharmacy business and an information technology business in the Southeast. 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, 2024 and other filings with the Securities and Exchange Commission which can be located at www.sec.gov.
