Regional Health Properties Reports First Quarter 2020 Financial Results

ATLANTA, June 16, 2020 /PRNewswire/ -- 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, 2020.

Business Update

    --  Successfully settled a total of two professional liability claims during
        the first and second quarter of 2020.
    --  Continued in the Company's capital improvement plan for our Ohio
        facilities. Management is encouraged by the early results and
        anticipates further improvements ultimately leading to higher cash
        rents.

Brent Morrison, Regional Health Properties' Chief Executive Officer, stated, "We applaud the extraordinary efforts of our operating partners and their staff to keep their residents safe during these unprecedented times caused by the COVID-19 pandemic. Many facilities have stopped admitting new patients in order to control the spread of COVID-19, resulting in lower occupancy rates, as operating costs are increasing from demands for protective gear and other items to boost efforts for infectious control. Fortunately, we've seen federal and state agencies act quickly through the CARES Act to mitigate these operating pressures so our operators have the resources they need in order to care for their residents."

Mr. Morrison continued, "With the future status of the pandemic still unknown, we continue to see a significant long-term need for our assets. As the pandemic subsides, we anticipate facility operating results to migrate back to more normal levels."

See the Company's recently filed Form 10-Q for additional details on the current and potential impact of COVID-19 on our business.

Management periodically monitors a number of facility performance metrics, including rent coverages both before and after management fees. In the first quarter of 2020, the Company's portfolio rent coverage before management fees was 1.6x and rent coverage after management fees was 1.2x. Occupancy and skilled mix for the Company's portfolio were 76.4% and 27.8% for the first quarter of 2020, respectively. These data exclude the impact of three managed facilities located in Ohio and one facility located in North Carolina, which transitioned to a new operator on March 1, 2019.

Summary of Financial Results for the Three Months Ended March 31, 2020

Total revenues in the first quarter of 2020 decreased 16.2% to $4.5 million, from $5.4 million in the first 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 5.3%, to $0.9 million for the three months ended March 31, 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 $0.9 million, or 56.8%, to $0.7 million for the first 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 first quarter of 2020 was $2.3 million, or $1.34 per basic and diluted share, compared to a net loss of $2.1 million or $1.22 per basic and diluted share in the prior year period.

Cash at March 31, 2020, totaled $4.0 million compared to $4.4 million at December 31, 2019. Restricted cash at March 31, 2020, totaled $3.3 million compared to $3.7 million at December 31, 2019. Total debt outstanding at March 31, 2020 amounted to $55.0 million compared to $55.4 million at December 31, 2019 (net of $1.3 million and $1.4 million of deferred financing costs at March 31, 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.


                        
       
         REGIONAL HEALTH PROPERTIES, INC. AND SUBSIDIARIES


                                
           CONSOLIDATED BALANCE SHEETS


                               
           
              (Amounts in 000's)




                                                    
            March 31,              
     December 31,


                                   ASSETS                               2020                          2019

                       ---

                                             
            
              (Unaudited)


      Property and
       equipment, net                                                $54,175                       $54,672



     Cash                                                             3,990                         4,383


      Restricted cash                                                  3,320                         3,655


      Accounts receivable,
       net of allowance of
       $662 and $615                                                   1,410                           963


      Prepaid expenses and
       other                                                             336                           249


      Notes receivable                                                   840                           840


      Intangible assets -
       bed licenses                                                    2,471                         2,471


      Intangible assets -
       lease rights, net                                                 340                           462


      Right-of-use
       operating lease
       assets                                                         36,425                        37,287



     Goodwill                                                         1,585                         1,585


      Lease deposits and
       other deposits                                                    517                           517


      Straight-line rent
       receivable                                                      6,954                         6,674


      Total assets                                                  $112,363                      $113,758

                                                                                                      ===



                                           LIABILITIES AND EQUITY

                              ---



      Senior debt, net                                               $48,056                       $48,415



     Bonds, net                                                       6,421                         6,409


      Other debt, net                                                    509                           539


      Accounts payable                                                 3,538                         3,699


      Accrued expenses                                                 2,406                         2,613


      Operating lease
       obligation                                                     38,455                        39,262


      Other liabilities                                                1,237                         1,078


      Total liabilities                                              100,622                       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
           March 31, 2020
           and December 31,
       2019                                                           62,004                        61,992


      Preferred stock, no
       par value; 5,000
       shares authorized;
       2,812
       shares issued and
       outstanding,
       redemption amount
       $70,288
             at
       March 31, 2020 and
       December 31, 2019                                              62,423                        62,423


      Accumulated deficit                                          (112,686)                    (112,672)


      Total stockholders'
       equity                                                         11,741                        11,743



      Total liabilities
       and stockholders'
       equity                                                       $112,363                      $113,758

                                                                                                      ===



       
                REGIONAL HEALTH PROPERTIES, INC. AND SUBSIDIARIES


      
          CONSOLIDATED STATEMENTS OF OPERATIONS



       
                (Amounts in 000's, except per share data)


         
              
                (Unaudited)




                                                   Three Months Ended March 31,


                                                     2020                 2019

                                                                          ---


       Revenues:


        Rental revenues                            $4,297               $5,138


        Management fees                               244                  239


        Other revenues                                  7                   47

                                                                          ---

        Total revenues                              4,548                5,424

                                                                          ---


       Expenses:


        Facility rent expense                       1,640                1,726


        Cost of management fees                       151                  159


        Depreciation and
         amortization                                 776                1,023


        General and
         administrative expenses                      877                  926


        Recovery for doubtful
         accounts                                     (2)               (172)


        Other operating expenses                      224                  408

                                                                          ---

        Total expenses                              3,666                4,070

                                                                          ---

        Income from operations                        882                1,354



       Other expense (income):


        Interest expense, net                         715                1,654


        Loss on extinguishment
         of debt                                        -                 333


        Gain on disposal of
         assets                                         -               (690)


        Other expense, net                            144                    7

                                                                          ---

        Total other expense, net                      859                1,304

                                                                          ---



        Income from continuing
         operations before
         income taxes                                  23                   50


        Income tax expense                              -                  44


        Income from continuing
         operations                                    23                    6


        (Loss) income from
         discontinued
         operations, net of tax                      (37)                 178

                                                                          ---

        Net (loss) income                            (14)                 184


        Preferred stock
         dividends -undeclared                    (2,249)             (2,249)

                                                                          ---

        Net loss attributable to Regional Health Properties, Inc.


        Common Stockholders                      $(2,263)            $(2,065)

                                                                          ===




       Net loss per share of common stock attributable to



       Regional Health Properties, Inc.



       Basic and diluted:


             Continuing operations                $(1.32)             $(1.33)


             Discontinued operations               (0.02)                0.11


                                                  $(1.34)             $(1.22)

                                                                          ===




       Weighted average shares of common stock outstanding:


             Basic and diluted                      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)   
        June 30, 2019                   
              September 30, 2019              
      December 31, 2019             
        March 31, 2020

                                                                                                                                                                                               ---


     Occupancy (%)                                                        76.7%                                            76.6%                          76.6%                            76.4%



     Quality Mix (2)                                                       27.8%                                            27.9%                          27.9%                            27.8%



     Rent Coverage Before Management Fees (3)                               1.48                                              1.44                            1.54                              1.59



     Rent Coverage After Management Fees (3)                                1.12                                              1.07                            1.16                              1.21


              (1)              Excludes three managed facilities
                                  in Ohio one facility located in
                                  North Carolina and transitioned on
                                  March 1, 2019.





              (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.

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SOURCE Regional Health Properties, Inc.