SUNLINK HEALTH SYSTEMS INC – 10-Q – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share and admissions data)
Forward-Looking Statements
This Quarterly Report and the documents that are incorporated by reference in
this Annual Report contain certain forward-looking statements within the meaning
of the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. Forward-looking statements include all
statements that do not relate solely to historical or current facts and may be
identified by the use of words such as "may," "believe," "will," "seeks to",
"expect," "project," "estimate," "anticipate," "plan" or "continue." These
forward-looking statements are based on the current plans and expectations and
are subject to a number of risks, uncertainties and other factors which could
significantly affect current plans and expectations and our future financial
condition and results. Throughout the notes to the consolidated financial
statements,
referred to on a collective basis as "SunLink", "we", "our", "ours", "us" or the
"Company." This drafting style is not meant to indicate that
Systems, Inc.
or operates any asset, business, or property. Healthcare services, pharmacy
operations and other businesses described in this filing are owned and operated
by distinct and indirect subsidiaries of
forward-looking statements are based on current plans and expectations and are
subject to a number of risks, uncertainties and other factors that could
significantly affect current plans and expectations and our future financial
condition and results. These factors, which could cause actual results,
performance, and achievements to differ materially from those anticipated,
include, but are not limited to:
General Business Conditions
• general economic and business conditions in the U.S. , both nationwide and
in the states in which we operate;
• the effects of the coronavirus ("COVID-19") pandemic, both nationwide and
in the states in which we operate, including among other things, on demand
for our customary services, the efficiency of such services, availability
of staffing, availability of supplies, costs and financial results;
• the effects of COVID-19 on our ability to provide for customary services
including the large number of unvaccinated persons in Louisiana and
Mississippi , the primary states in which we conduct healthcare operations;
• increases in uninsured and/or underinsured patients due to COVID,
unemployment or other conditions, higher deductibles and co-insurance, or
other terms of health insurance and drug coverage resulting in higher bad
debt amounts;
• the competitive nature of the U.S. community hospital, extended care and
rehabilitation center, nursing home, and pharmacy businesses;
• demographic characteristics in areas where we operate, including
resistance to vaccination for COVID-19 as well as demographic changes in
areas where we operate;
• the availability of cash or borrowings to fund working capital,
renovations, replacements, expansions, and capital improvements at
existing healthcare and pharmacy facilities and for acquisitions and
replacement of such facilities;
• changes in accounting principles generally accepted in the U.S. ; and
• Fluctuations in the market value of equity securities including SunLink
common shares.
Operational Factors
• the ability or inability to operate profitably in one or more segments of
the healthcare business;
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• the availability of, and our ability to attract and retain, sufficient
qualified staff physicians, management, nurses, pharmacists, and staff
personnel for our operations including the impact of COVID-19 vaccination
mandates on our ability to attract and retain such persons;
• timeliness and amount of reimbursement payments received under government
programs;
• changes in interest rates under any lending agreements and other
indebtedness;
• the ability or inability to refinance or pay principal on existing
indebtedness and/or any existing or potential defaults under existing
indebtedness;
• the lack of availability of future governmental support that may be
required to offset the continuing effect of the COVID-19 pandemic and
absence of forgiveness features in any such future loans or an inability
to meet the usage or forgiveness requirements;
• the ability to achieve compliance with requirements for the expenditure
and retention of PRF funds:
• restrictions imposed by existing or future lending agreements or other
indebtedness;
• the cost and availability of insurance coverage including professional
liability (e.g., medical malpractice) and general, employment, fiduciary,
and other liability insurance;
• the efforts of insurers, healthcare providers, and others to contain
healthcare costs;
• the impact on hospital, clinic, and nursing home services of the treatment
of patients in alternative or lower acuity healthcare settings, such as
with drug therapy or in surgery centers, and urgent care centers,
retirement homes or at home;
• changes in medical and other technology;
• changes in estimates of self-insurance claims and reserves;
• changes in prices of materials and services utilized in our Healthcare
Services and Pharmacy segments;
• changes in wages as a result of inflation or competition for physician,
nursing, pharmacy, management, and staff positions;
• changes in the amount and risk of collectability of accounts receivable,
including deductibles and co-pay amounts;
• the functionality of or costs with respect to our information systems for
our Healthcare Services and Pharmacy segments and our corporate office,
including both software and hardware;
• the availability of and competition from alternative drugs or treatments
to those provided by our Pharmacy segment;
• the restrictions, clawbacks, processes, and conditions relating to our
Pharmacy segment imposed by pharmacy benefit managers, drug manufacturers,
and distributors; and
• the ability of our Pharmacy segment to sustain its claims for exemption
from sales taxes position in Louisiana on any revenue from sales of
products and services to beneficiaries of government insurance programs to
the extent reimbursed by administrators of such programs.
Liabilities, Claims, Obligations and Other Matters
• claims under leases, guarantees, disposition agreements, and other
obligations relating to asset sales or discontinued operations, including
claims from sold or leased facilities and services, retained liabilities
or retained subsidiaries;
• potential adverse consequences of any known and unknown government
investigations;
• claims for product and environmental liabilities from continuing and
discontinued operations;
• professional, general, and other claims which may be asserted against us,
including claims based on a future unknown to u or our physicians and
other personnel to comply with COVID-19 vaccination mandates; and
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• natural disasters and weather-related events such as tornados,
earthquakes, hurricanes, flooding, snow, ice and wind damage, and
population evacuations affecting areas in which we operate.
Regulation and Governmental Activity
• existing and proposed governmental budgetary constraints;
• Federal and state insurance exchanges and their rules relating to
reimbursement terms;
• the continuing decision by Mississippi (where we operate our remaining
hospital and nursing home) to not expand Medicaid;
• the regulatory environment for our businesses, including state certificate
of need laws and regulations, pharmacy licensing laws and regulations,
rules and judicial cases relating thereto;
• changes in the levels and terms of government (including Medicare,
Medicaid and other programs) and private reimbursement for SunLink's
healthcare services including the payment arrangements and terms of
managed care agreements; EHR reimbursement and indigent care
reimbursements (Medicare Upper Payment Limit "UPL" and Disproportionate
Share Hospital "DSH" adjustments) and governmental assessments for such
programs;
• changes in or failure to comply with Federal, state or local laws and
regulations and enforcement interpretations of such laws and regulations
affecting our Healthcare Services and Pharmacy segments; and
• the possible enactment of additional Federal healthcare reform laws or
reform laws in states where our subsidiaries operate hospital and pharmacy
facilities (including Medicaid waivers, bundled payments, managed care
programs, accountable care and similar organizations, competitive bidding
and other reforms).
Dispositions, Acquisition and Renovation Related Matters
• the ability to dispose of underperforming facilities and business segments;
• the availability of cash and the terms of capital to fund acquisitions,
improvements, renovations or replacement facilities; and
• competition in the market for acquisitions of hospitals, nursing homes,
pharmacy facilities, and healthcare businesses.
The foregoing are significant factors we think could cause our actual results to
differ materially from expected results. However, there could be additional
factors besides those listed herein that also could affect SunLink in an adverse
manner. You should read this Quarterly Report completely and with the
understanding that actual future results may be materially different from what
we expect. You are cautioned not to unduly rely on forward-looking statements
when evaluating the information presented in this Quarterly Report or our other
disclosures because current plans, anticipated actions, and future financial
conditions and results may differ from those expressed in any forward-looking
statements made by or on behalf of SunLink.
We have not undertaken any obligation to publicly update or revise any
forward-looking statements. All of our forward-looking statements speak only as
of the date of the document in which they are made or, if a date is specified,
as of such date. We disclaim any obligation or undertaking to provide any
updates or revisions to any forward-looking statement to reflect any change in
our expectations or any changes in events, conditions, circumstances or
information on which the forward-looking statement is based, except as required
by applicable law. All subsequent written and oral forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by the foregoing factors and the other risk factors set forth
elsewhere in this report and/or in our Annual Report on Form 10-K.
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Business Strategy: Operations, Dispositions and Acquisitions
The business strategy of SunLink is to focus its efforts on improving the
operations, services and profitability of its existing Healthcare Services and
Pharmacy businesses. While the Company intends primarily to pursue its business
strategy of improving its operations, services and profitability of its existing
businesses, subject to available capital and other resources, the Company also
intends to pursue growth by selective acquisitions in the healthcare and
pharmacy segments. We believe, however, the COVID-19 pandemic has resulted in
substantial additional uncertainties and risks in our businesses which are not
subject to estimation at this time, particularly because the COVID-19 is novel
in nature, uncertain in duration, and materially affected by government actions
related to the pandemic. In response to the pandemic, the Company has
discontinued certain services, laid off or furloughed employees where necessary,
reduced cash outlays where possible, and deferred other strategic activities.
Our ability to resume the pursuit of our normal business strategy, including
growth initiatives, will depend on the effect of, among other things, the
nature, extent and timing of the COVID-19 pandemic and government actions in
response thereto.
The Company expects to use existing cash primarily to sustain it operations
during the COVID-19 pandemic, for growth initiatives when available and
appropriate, and for other general corporate purposes. There is no assurance
that further dispositions of assets or any acquisitions will be authorized by
the Company's Board of Directors or, if authorized, that any such transactions
will be completed. Although the Company believes certain portions in its
Healthcare Services segment as well as its Pharmacy segment continue to
under-perform, the Company is not currently offering any of its businesses for
sale.
COVID-19 Pandemic and CARES Act Funding
COVID-19 was declared a global pandemic by the
our operations, and we have taken significant steps intended to minimize the
risk to our employees and patients. Certain employees have been working
remotely, but we believe these remote work arrangements have not materially
affected our ability to maintain critical business operations, which are being
conducted substantially in accordance with our understanding of applicable
government health and safety protocols and guidance issued in response to the
COVID-19 pandemic, although such protocols and guidance are recent, rapidly
changing and at times, unclear. Nevertheless, as in many healthcare
environments, we have experienced COVID-19 illness, including deaths, and some
employees have tested positive and were placed on leave or in quarantine. We
believe the effect of the COVID-19 pandemic and public and governmental
responses to it have negatively affected our last seven quarters results.
In late
have vaccinated patients, providers, employees, and staff in accordance with the
protocols and guidelines in the states where we operate. Not all such
individuals have been vaccinated to date and some individuals have not consented
to vaccination. The Company and its subsidiaries are currently developing and
will implement plans to vaccinate employees to the extent required by the final
rules issued by
result in the loss of certain staff, including clinical staff, which may impact
the Company's ability to maintain the current levels of service.
In our Healthcare businesses, we have experienced material reductions in demand
and net revenues due to the COVID-19 outbreak. There continues to be reduced
current demand for certain hospital services, and for extended care,
rehabilitation center and nursing home admissions, and clinic visits. The
availability and cost of medical supplies have adversely affected our Healthcare
businesses, and we continue to monitor supplies and seek additional sources of
many supply items. A reduction in the availability of qualified employees has
also occurred, and, despite good faith efforts to do so, we have not yet been
able to rehire or fully replace staff which were previously furloughed, laid off
or retired.
Since the beginning of the COVID-19 pandemic, our Pharmacy business has
experienced reduced sales trends in certain areas, increased costs and reduced
staff. Many of our primary physician referral sources have operated at reduced
capacity, and until these referral sources are at full capacity, we believe the
COVID-19 pandemic will continue to affect the demand for DME products and
and Institutional Pharmacy
been made in response to the lower demand. Extended care facilities and
rehabilitation centers, nursing homes and other customers of our
Pharmacy
Our
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costs and operational inefficiencies due to measures taken to protect our
employees and by access controls and other restrictions implemented by our
institutional customers. The impact of the COVID-19 pandemic has negatively
affected our supply processes, especially with respect to access to respiratory
equipment and certain personal protective equipment and cleaning products.
Our Healthcare and Pharmacy segments have received approximately
general and targeted Provider Relief Funds ("PRF") during the period
2020
2020
accounted for as government grants, and a total of
since April l, 2020 as other income under the gain contingency recognition
method.
During the quarter ended
received
forgivable upon compliance with conditions specified under the PPP loan program.
As of
The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted
2020
available under the CARES Act, including modifying and extending the Employee
Retention Credit ("ERC") for the six calendar months ending
result of such legislation, the Company qualified for ERC for the first and
second calendar quarters of 2021 due to the decrease in its gross receipts and
has applied for ERC of
the applicable quarters.
PRF distributions are not subject to repayment provided we are able to attest to
and comply with the terms and conditions of the funding, including demonstrating
that the funds received have been used for designated, allowable
healthcare-related expenses and capital expenditures attributable to COVID-19
and for "Lost Revenues" as defined by HHS. We continue to monitor compliance
with the terms and conditions of the PRF and the impact of the pandemic on our
revenues and expenses. If we are unable to attest to or comply with current or
future terms and conditions, and there is no assurance we will be able to do so,
our ability to retain some or all of the PRF received may be impacted, and we
may have to return the unutilized portion of those funds, if any, in the future.
Going forward, the Company is unable to determine the extent to which the
COVID-19 pandemic will continue to affect its assets and operations. Our ability
to make estimates of the effect of the COVID-19 pandemic on revenues, expenses
or changes in accounting judgments that have had or are reasonably likely to
have a material effect on our financial statements is currently limited. The
nature and extent of the effect of the COVID-19 pandemic on our balance sheet
and results of operations will depend on the severity and length of the
pandemic; government actions to mitigate the pandemic's effect; regulatory
changes in response to the pandemic, especially those that affect our hospital,
extended care, rehabilitation center, nursing home, clinics, and our pharmacy
operations; existing and potential government assistance that may be provided;
and the requirements of PRF receipts, including our ability to retain such PRF
received.
For additional discussion of the risks presented by the COVID-19 pandemic to our
results, see Risk Factors in Part II, Item 1A of this Form 10-Q.
Critical Accounting Estimates
The preparation of financial statements in accordance with
to make estimates and assumptions that affect reported amounts and related
disclosures. We consider an accounting estimate to be critical if it requires
assumptions to be made that were uncertain at the time the estimate was made;
and changes in the estimate or different estimates that could have been made
could have a material impact on our consolidated results of operations or
financial condition.
Our critical accounting estimates are more fully described in our 2021 Annual
Report on Form 10-K and continue to include the following areas: receivables -
net and provision for doubtful accounts; revenue recognition and net patient
service revenues; goodwill, intangible assets and accounting for business
combinations; professional and general liability claims; and accounting for
income taxes.
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Financial Summary
The Company's operations for the three months ended
to be impacted by the COVID-19 pandemic.
The results of continuing operations shown in the financial summary below are
for our two business segments, Healthcare Services and Pharmacy.
Three Months Ended
September 30,
2021 2020 % Change
Net Revenues - Healthcare Services $ 3,498 $ 3,465 1.0 %
Net Revenues - Pharmacy 7,027 6,957 1.0 %
Total Net Revenues 10,525 10,422 1.0 %
Costs and expenses (11,518 ) (10,745 ) 7.2 %
Operating profit (loss) (993 ) (323 ) 207.4 %
Interest income (expense) - net (14 ) (7 ) 100.0 %
Federal stimulus - Provider relief funds 0 31 (100.0 )%
Forgiveness of PPP loans and accrued interest 3,010 0 NA
Gain on sale of assets 5 8 (37.5 )%
Earnings from continuing operations before
income taxes $ 2,008 $ (291 ) NA
Results of Operations
Our net revenues are from our two business segments, Healthcare Services and
Pharmacy. The Company's revenues by payor were as follows for the three months
ended
Three Months Ended
September 30,
2021 2020
Medicare $ 5,055 $ 4,533
Medicaid 2,368 2,621
1,320 1,432 Self-pay 184 101 Other 31 45 Total Net Revenues$ 10,525 $ 10,422
The Healthcare Services segment in the current year is composed of one hospital,
one extended care and rehabilitation center and a subsidiary which provides
information technology services to outside customers and SunLink subsidiaries.
Healthcare Services net revenues increased
period ended
prior year period. Hospital patient days and clinic visit increases were offset
by a 9 % decrease in extended care patient days.
Pharmacy segment net revenues for the three months period ended
2021
Durable Medical Equipment sales increased 6.5% for the three month period ended
primarily due to higher respiratory equipment orders. Retail pharmacy sales
decreased 3.5% for the three month period ended
prior year period due to lower revenue per script despite a 0.8% increase in
retail pharmacy scripts filled. Institutional pharmacy sales decreased 1.29% for
the three month period ended
to the loss of one larger institutional customer.
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Costs and expenses, including depreciation and amortization, were
Cost and Expenses
as a % of Net Revenues
Three Months Ended
September 30,
2021 2020
Cost of goods sold 38.7 % 39.1 %
Salaries, wages and benefits 44.6 % 42.1 %
Supplies 2.9 % 2.2 %
Purchased services 8.2 % 6.2 %
Other operating expenses 10.3 % 9.1 %
Rent and lease expense 1.6 % 1.6 %
Depreciation and amortization expense 3.2 % 2.9 %
Cost of goods sold decreased as a percent of net revenues for the three month
period ended
institutional pharmacy drugs this year which have a higher relative cost than
DME products. Salaries, wages, and benefits increased as a percent of net
revenues for the three months period ended
period last fiscal year due to higher salaries and wages due to labor market
conditions, operating challenges of labor allocation relating to the pandemic,
including contract labor, and higher employee health claims expenses. Supplies
expenses increase this year due to increased purchase prices due to market
demand and supply disruptions. Purchased services costs increased this year due
to increased costs of fuel, the outsourcing at a Healthcare Services facility of
cleaning and dietary services and increased cost of software support services of
the Healthcare Services segment. Other operating expenses increased as percent
of net revenues during the fiscal quarter this year due to the increased cost of
insurance. Depreciation expense also increased as a percentage of net revenue
this year due to the
Operating Profit (Loss)
The Company reported an operating loss of
period ended
ended
services and insurance costs, not covered by the slightly higher revenues.
Forgiven of PPP loans and accrued interest
During the quarter ended
related
as income relating to PPP loan forgiveness for the quarter ended
2021
Other Income - Federal Stimulus - Provider relief funds
As part of the CARES ACT, two subsidiaries have received PRF payments. The
Company recognized
and 2020 respectively.
Interest Income (Expense) -Net
Interest expense, net, was
2021
Income Taxes
Income tax expense of
operations for the three months ended
respectively.
Of the CARES Act provisions, the most material income tax considerations related
to the Company are related to the amounts for ERC and amounts received as
general and targeted PRF. Based on the latest published
preparation of the
the applicable terms and conditions required to retain the funds are met
"Retainable PRF") are fully includable in taxable income in the
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Company's tax returns in the fiscal year received. ERC are included in tax
income in the Company's tax returns in the quarter in which the payroll expenses
for which the credits offset are deductible. ERC results in qualified wages
being disallowed as a deduction for the portion of the wages paid equal to the
sum of the payroll tax credit taken in the associated quarter. For amounts
received and forgiven under the PPP loans, due to the enactment of the
Consolidated Appropriations Act, 2021, on
specifically allows the deduction of any expenses associated with forgiven PPP
loan proceeds. It is the Company's assumption at
Loan associated expenses will be deductible for income tax.
In accordance with the Financial Accounting Standards Board Accounting Standards
Codification ("ASC") 740, we evaluate our deferred taxes quarterly to determine
if adjustments to our valuation allowance are required based on the
consideration of available positive and negative evidence using a "more likely
than not" standard with respect to whether deferred tax assets will be realized.
Our evaluation considers, among other factors, our historical operating results,
our expectation of future results of operations, the duration of applicable
statuary carryforward periods and conditions of the healthcare industry. The
ultimate realization of our deferred tax assets depends primarily on our ability
to generate future taxable income during the periods in which the related
temporary differences in the financial basis and the tax basis of the assets
become deductible. The value of our deferred tax assets will depend on
applicable income tax rates.
At
for a valuation allowance against our deferred tax assets and determined that it
was more likely than not that none of our deferred tax assets would be realized.
As a result, in accordance with ASC 740, we recognized a valuation allowance of
income tax asset or liability at
by considering available positive and negative evidence to determine our ability
to realize our deferred tax assets. In our evaluation, we gave more significant
weight to evidence that was objective in nature as compared to subjective
evidence. Also, more significant weight was given to evidence that directly
related to our current financial performance as compared to less current
evidence and future performance.
The principal negative evidence that led us to determine at
that all the deferred tax assets should have full valuation allowances was the
projected current fiscal year tax loss disregarding unusual items associated
with the CARES Act discussed above, history of losses as well as the underlying
negative business conditions for rural healthcare businesses in which our
Healthcare Services Segment businesses operate and the Federal income tax net
operating loss carry-forward of approximately
For Federal income tax purposes, at
approximately
for use in future years subject to the limitations of the provisions of Internal
Revenue Code Section 382. These net operating loss carryforwards expire
primarily in fiscal 2023 through fiscal 2038; however, with the enactment of the
Tax Cut and Jobs Act on
carryforwards generated in taxable years beginning after
have no expiration date. The Company's returns for the periods prior to the
fiscal year ended
state income tax examination.
Earnings (Loss) from Continuing Operations after Income Taxes
Earnings from continuing operations after income tax was
months ended
after income tax of
increased earnings from continuing operations this year compared to the prior
year was due to income recognized for PPP loan forgiveness this year, offset in
part by the current period operating loss.
Loss from Discontinued Operations after Income Taxes
The loss from discontinued operations after income taxes was
month period ended
operations after income taxes of
30, 2020
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Discontinued Operations
substantially all the assets of four hospitals ("Sold Facilities") during the
period
Facilities results primarily from the effects of retained professional liability
insurance and claims expenses and settlement of a lawsuit.
Life Sciences and Engineering Segment -SunLink retained a defined benefit
retirement plan which covered substantially all of the employees of this segment
when the segment was sold in fiscal 1998. Effective
was amended to freeze participant benefits and close the plan to new
participants. Pension expense and related tax benefit or expense is reflected in
the results of operations for this segment for the three months ended
30, 2021
Net Earnings (Loss)
Net income for the three months period ended
(
2020
Liquidity and Capital Resources
Overview
Our primary source of liquidity is unrestricted cash on hand, which was
at
working capital needs primarily from cash on hand. From time -to-time, we may,
nevertheless, seek to obtain financing for the liquidity needs or the Company or
individual subsidiaries based on anticipated need. However, currently, the
Company's ability to raise capital (debt or equity) in the public or private
markets on what it considers acceptable terms is uncertain, and due to the
COVID-19 pandemic and related factors, may be non-existent.
CARES Act Funds - The CARES Act was enacted by the
2020
grants under PRF and forgivable loans under PPP. We have received a total of
PRF and
Company became eligible for, and we applied for
quarterly payroll tax filings. In
receive Phase 4 Provider Relief Funds. We do not know if or in what amount we
will receive any additional PRF under Phase 4.
Subject to the effects, risks and uncertainties associated with the COVID-19
pandemic and our ability to retain the CARES funds described above, we believe
we have adequate financing and liquidity to support our current level of
operations through the next twelve months.
Contractual Obligations, Commitments and Contingencies
Contractual obligations, commitments and contingencies related to outstanding
debt, noncancelable operating leases and interest on outstanding debt from
continuing operations at
Interest on
Payments Long-Term Operating Outstanding
due within: Debt Leases Debt
1 year $ 37 $ 366 $ 4
2 years 40 266 2
3 years 4 257 0
4 years 0 239 0
5 years 0 75 0
Over 5 years 0 8 0
$ 81 $ 1,211 $ 6
As of
23
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At
for future capital expenditures for our Trace hospital under its Trace Forward
Capital Plan which was announced in
improves the physical plant, patient care, ancillary services and support areas
of the Trace hospital. In addition to the
Capital Plan, at
expenditures of approximately
Pharmacy segment and approximately
durable medical equipment by the Pharmacy segment (to be rented to customers)
through the end of fiscal 2022. The actual amount which will be expended is
difficult to predict due to various factors including varying demand for such
equipment as well as the availability given current supply sourcing challenges.
The Company anticipates funding such expenditures primarily from cash on hand.
Other cash expenditures for the next 12 months currently are expected to be
in-line with expenditures for the quarter ended
been no material changes outside the ordinary course of business relating to our
upcoming cash obligations which have occurred during the three months ended
(based on current operating levels) for long-term debt, operating leases, and
interest on current outstanding debt, as well as continued uncertainties
relating to the continuing impact of the COVID-19 pandemic, the Company is
currently unaware of other trends or unusual uncertainties that are likely to
cause a material change in its cash expenditures in periods beyond the next
twelve months. See Notes 7, 9, 10, and 11 to our financial statements. The
Company is also unaware of events that are reasonably likely to cause a material
change in the relationship between its costs and revenues (such as known or
reasonably likely future increases in costs of labor or materials, price
increases or inventory adjustments, beyond those discussed herein); however, we
are unable to predict with any degree of accuracy whether, or the extent to
which, recent inflationary price trends in 2021 are transitory or reflect the
beginning of an inflationary cycle.
Related Party Transactions
A director of the Company is a member of a law firm which provides services to
SunLink. The Company expensed an aggregate of
this law firm in the three months ended
respectively. Included in the Company's condensed consolidated balance sheets
at
payable to this law firm.
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