SunLink Health Systems, Inc. (NYSE American: SSY) today reported a loss from continuing operations of $652,000 (or $0.09 per diluted share) for the fourth fiscal quarter ended June 30, 2024, an improvement from the $1,021,000 loss (or $0.15 per diluted share) recorded for the same period in 2023.
Earnings from discontinued operations were $4,940,000 (or $0.70 per diluted share) for the fourth quarter of 2024, compared to a loss of $405,000 (or $0.06 per diluted share) in the same quarter of 2023. This increase was largely driven by the sale of Trace Extended Care & Rehab, a senior care facility in Houston, Mississippi, by SunLink’s indirect subsidiary, Southern Health Corporation of Houston, Inc. The sale generated net proceeds of $6,522,000 and a gain of $5,584,000, which is reflected in the discontinued operations results.
Due to this sale, SunLink reported net income of $4,288,000 (or $0.61 per diluted share) for Q4 2024, compared to a net loss of $1,426,000 (or $0.20 per diluted share) in Q4 2023.
On January 22, 2024, Southern executed revised agreements for the sale of Trace Regional Hospital and related assets in Mississippi to Progressive Health of Houston, LLC. The agreement included a $500,000 sale of personal and intangible property, a six-month lease of the hospital’s real estate at $20,000 per month, and a contract to sell the hospital real estate for $2,000,000. However, SunLink recorded a $962,000 loss on the sale of Trace Hospital assets, including $174,000 in sale-related expenses. The real estate sale is expected to be completed by October 4, 2024, but SunLink recorded an impairment loss of $1,974,000 in December 2023, reflecting the reduced net value of the Trace Hospital assets. A remaining impairment reserve of $1,695,000 was recorded as of June 30, 2024.
Consolidated net revenues for the fiscal quarters ended June 30, 2024 and 2023 were $7,913,000 and $8,010,000, respectively, largely driven by pharmacy operations. Pharmacy revenue decreased by $97,000, or 1%, in Q4 2024 compared to the previous year, due to lower pharmacy scripts dispensed. The Q4 2024 results included $34,000 in prior period sales tax credits.
SunLink’s operating loss for Q4 2024 was $675,000, an improvement from the $1,112,000 operating loss reported in Q4 2023, primarily due to a higher gross profit margin on pharmacy revenue.
For the full fiscal year ended June 30, 2024, SunLink reported a loss from continuing operations of $2,311,000 (or $0.33 per diluted share), compared to earnings of $198,000 (or $0.03 per diluted share) for the prior year. Earnings from discontinued operations were $784,000 (or $0.11 per diluted share) for fiscal 2024, compared to a loss of $1,993,000 (or $0.28 per diluted share) in fiscal 2023, largely reflecting the Trace Hospital and Extended Care transactions and related impairments.
SunLink posted a net loss of $1,527,000 (or $0.22 per diluted share) for fiscal 2024, a slight improvement from the net loss of $1,795,000 (or $0.26 per diluted share) in fiscal 2023.
Consolidated net revenues for the full year were $32,440,000, down from $34,280,000 in fiscal 2023. The 2023 results included a $2,615,000 reversal of sales tax reserves, which boosted revenue that year. Fiscal 2024 results included $471,000 in prior period sales tax refunds. Excluding these tax adjustments, net revenues were essentially flat, decreasing by less than 1% compared to fiscal 2023.
SunLink reported an operating loss of $2,411,000 for fiscal 2024, compared to an operating profit of $74,000 in fiscal 2023, which had been bolstered by the reversal of sales tax reserves.
