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 Quarterly 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 this annual report and the notes to
the condensed consolidated financial statements,
and its consolidated subsidiaries are referred to on a collective basis as
"SunLink", "we", "our", "ours", "us" or the "Company." This drafting style is
not meant to indicate that
subsidiary of
or property. Healthcare services, pharmacy operations and other businesses
described in this filing are owned and operated by distinct and indirect
subsidiaries of
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 theU.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 and plateaued or stagnant vaccination and booster rates inGeorgia ,Louisiana andMississippi , the primary states in which we conduct healthcare operations. Future COVID-19 or other pandemics of other contagious diseases could result in the unavailability of personnel to provide services, regulatory bans on certain services or admissions, decreased occupancy levels, increase costs, reduce our revenues and otherwise adversely affect our business; • increases in uninsured and/or underinsured patients due to COVID-19, 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 theU.S. community hospital, extended care and rehabilitation center, nursing home, and pharmacy businesses; • demographic characteristics and changes in areas where we operate, including resistance to vaccination for COVID-19; • any new variants of the COVID-19 virus and other SARS-COV-2 viruses and other infectious diseases; • 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; 15
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• changes in accounting principles generally accepted in theU.S. ; • the impact of inflation on our patients, operating costs, ability and feasibility of raising funds, and on our ability to achieve cash flow and profitability, including our inability to cover cost increases because most of our revenue is from government programs whose payments are fixed; and • fluctuations in the market value of equity securities including SunLink common shares, including fluctuations based on fears of actual inflation or recession.
Operational Factors
• the ability or inability to operate profitably in one or more segments of
the healthcare business;
• the availability of, and our ability to attract and retain, sufficient
qualified staff physicians, management, nurses, pharmacists, and staff
personnel for our operations;
• timeliness and amount and conditions on of reimbursement payments received
under government programs;
• the lack of availability of future governmental support that may be
required to offset the continuing effects 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 of the expenditure and
retention of Provider Relief Funds ("PRF");
• the ability or inability to fund our obligations under capital leases or
new or existing obligations and/or any existing or potential defaults
under existing indebtedness;
• restrictions imposed by existing or future contractual obligations
including existing or new 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 governmental authorities, insurers, healthcare providers,
and others to contain and reduce 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, 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;
• increases in prices of materials and services utilized in our Healthcare
Services and Pharmacy segments;
• increases in wages as a result of inflation or competition for physician,
nursing, pharmacy, management, and staff positions;
• any impairment in our ability to collect 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.
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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 medical malpractice product, environmental or other liabilities
from continuing and discontinued operations;
• professional, general, and other claims which may be asserted against us,
including claims based on a failure currently unknown to us of our
physicians and other personnel to comply with COVID-19 vaccination
mandates;
• potential damages and consequences of 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; and
• potential adverse contingencies of terrorist acts, crime or civil unrest.
Regulation and Governmental Activity
• negative consequences of existing and proposed governmental budgetary
constraints or modification or termination of existing government programs
or the implementation and related costs and disruptions of new government
programs such as environmental, social and governance programs;
• negative consequences of 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; indigent care and other reimbursements (Medicare
Upper Payment Limit "UPL" and Disproportionate Share Hospital "DSH"
adjustments) and governmental assessments for such programs;
• the failure of government and private reimbursement to cover our
increasing costs;
• 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).
17
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Dispositions, Acquisition and Renovation Related Matters
• the ability to dispose of underperforming facilities, underperforming
business segments and surplus assets;
• the availability of cash and the terms of capital to fund acquisitions or
replacement facilities, improvements or renovations to existing facilities
or both; and
• competition in the market for acquisitions of hospitals, rehabilitation
centers, nursing homes, pharmacy facilities, and other 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.
Business Strategy: Operations, Dispositions and Acquisitions
The business strategy of SunLink is to focus its efforts on improving its
operations and services generally and achieving and maintaining profitability in
its existing Healthcare Services and Pharmacy businesses. While the Company
intends primarily to pursue its business strategy of improving its operations
and services and achieving and maintaining profitability in its existing
businesses, subject to available capital and other resources, the Company also
intends to pursue growth by selective healthcare and pharmacy acquisitions. We
believe; however, the COVID-19 pandemic and its aftermath has resulted in
substantial additional uncertainties and risks in our businesses which are not
subject to reliable 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 and its aftermath. In response to the pandemic,
the Company has discontinued certain services, laid off or furloughed employees
where necessary, reduced cash outlays where practicable, and deferred other
strategic activities. Our ability to resume the pursuit of our normal business
strategy, including growth initiatives, has been challenging and will depend on
the effect of, among other things, the nature, extent and timing of the existing
effects of COVID-19 pandemic, the end thereof, potential new COVID-19 or other
pandemics, and government actions in response thereto.
The Company expects to use existing cash primarily to sustain it operations in
response to the continuing impact of the COVID-19 pandemic, for growth
initiatives, including acquisitions, when available and appropriate, and for
other general corporate purposes. There is no assurance that any acquisitions or
dispositions of assets 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 of its businesses continue to under-perform,
and the Company periodically entertains overtures for the purchase of its
businesses, 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
COVID-19 pandemic and its aftermath and 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
18
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government health and safety protocols and guidance issued in response to the
COVID-19 pandemic, although such protocols and guidance have been subject to
frequent changes and at times have been unclear. Nevertheless, as in many
healthcare environments, we have experienced disruption of our operations,
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 certain public and certain governmental responses to it have
negatively affected our last eleven quarter's 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 of CMS. The Company believes the vaccine mandates have resulted in the
loss of staff, including clinical staff, and together with the current state of
the labor market, have negatively affected the Company's ability to maintain the
current levels of service.
In our Healthcare Segment business, we have experienced material reductions in
demand and net revenues due to the COVID-19 pandemic and its aftermath. 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 accompanied by an increase in the levels of salaries, wages
and benefits have occurred, and, despite good faith efforts to do so, we have
not yet been able to rehire or fully replace staff reductions which were
previously furloughed, laid off or retired.
During the COVID-19 pandemic and aftermath, our Pharmacy business has
experienced reduced sales trends in certain areas, increased costs and reduced
staff. Many of our primary physician referral sources have been operating at
reduced capacity, and until these referral sources resume operating at full
capacity, we believe the COVID-19 pandemic will have continuing to effects on
the demand for DME products and
products. Reductions in employee hours have been made in response to the lower
demand. Extended care facilities and rehabilitation centers, nursing homes and
other customers of our
affected by the COVID-19 pandemic. Our
experienced increased 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
and its aftermath also has and continues to negatively affected our supply
processes and costs generally.
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
CARES Act. These loans were forgivable upon compliance with conditions specified
under the PPP loan program. As of
been forgiven.
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. Through the date of this filing, the Company has
received
with the terms and conditions of the ERC and PPP programs and developing
interpretations and enforcement of the ERC and PPP program rules and the
regulations.
PRF distributions are subject to Federal audits and Single Audits and 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
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received have been used for designated, allowable healthcare-related expenses
and capital expenditures attributable to COVID-19 and for "Lost Revenues" as
defined by the department of "HHS". We continue to monitor compliance with the
terms and conditions of the PRF and developing interpretations and enforcement
of PRF rules and regulations, as well as 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.
The Company filed its Schedule of Grant Income of HHS awards and audit
report for the year ended
Administration
The Company is unable to determine the extent to which the COVID-19 pandemic and
its aftermath 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 continuing effect of the COVID-19 pandemic and its aftermath on
our balance sheet and results of operations will depend on the severity and
length of the pandemic or to evolving strains of COVID-19; any further
government actions to address the pandemic's continuing 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 continuing effects of 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 2022 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. There have been no material changes in our critical accounting
estimates for the periods presented other than amounts readily computable from
the financial statements included in this form 10-Q.
Financial Summary
The Company's operations for the three months ended
to be impacted by the effects of the COVID-19 pandemic, including among other
factors, difficulty hiring qualified employees, rising labor
20
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costs and supply chain challenges resulting in inability to obtain pharmacy and
DME products on a timely, cost effective basis.
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,
2022 2021 % Change
Net Revenues - Healthcare Services $ 3,784 $ 3,498 8.2 %
Net Revenues - Pharmacy 7,253 7,027 3.2 %
Total Net Revenues 11,037 10,525 4.9 %
Costs and expenses (12,650 ) (11,518 ) 9.8 %
Operating loss (1,613 ) (993 ) 62.4 %
Interest income (expense) - net (4 ) (14 ) (71.4 )%
Federal stimulus - Provider relief funds 61 0 NA
Forgiveness of PPP loans and accrued interest 0 3,010 NA
Gain on sale of assets 12 5 140.0 %
Earnings (loss) from continuing operations
before income taxes $ (1,544 ) $ 2,008 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,
2022 2021
Medicare $ 5,013 $ 5,055
Medicaid 2,856 2,368
1,385 1,320 Self-pay 259 184 Other 25 31 Total Net Revenues$ 11,037 $ 10,525
The Healthcare Services segment in the current year is composed of one hospital,
one extended care and rehabilitation center and four clinics, a subsidiary which
provides information technology services to outside customers and SunLink
subsidiaries and two subsidiaries holding undeveloped real estate. Healthcare
Services net revenues increased
increased hospital and extended care patient days and increased clinic visit
resulted in the net revenue increase this year.
Pharmacy segment net revenues for the three months period ended
2022
2021
ended
per script net revenues and 8.4% increase in scripts filled. Retail pharmacy
sales increased 6.2% for the three month period ended
the prior year period due to a 12.8% increase in revenue per script filled.
Durable Medical Equipment ("DME") sales decreased 6.5% for the three month
period ended
lower sales orders filled, despite a 1.9% increase in revenue per DME orders
filled.
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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,
2022 2021
Cost of goods sold 39.6 % 38.7 %
Salaries, wages and benefits 48.3 % 44.6 %
Supplies 3.1 % 2.9 %
Purchased services 9.4 % 8.2 %
Other operating expenses 9.9 % 10.3 %
Rent and lease expense 1.1 % 1.6 %
Depreciation and amortization expense 3.3 % 3.2 %
Cost of goods sold as a percent of net revenues increased 0.9% in the three
months ended
higher cost of certain pharmaceuticals and DME products which resulted from
supply chain issues. Salaries, wages and benefits expense as a percent of net
revenues increased 3.7% this year compared to the prior fiscal quarter due to
higher salaries and wages required in connection with current labor markets and
operating challenges of labor allocation relating to the pandemic, including the
use of contract labor. Purchased services cost increased this year due to
increased cost of fuel, outsourcing at our Healthcare Services facility of
certain services (due to challenges in hiring labor locally) and increased costs
of software support services. Other operating expenses decreased 0.4% of net
revenues due to decreased professional liability insurance expense. Depreciation
expense also increased as a percentage of net revenue this year due to the
Operating Loss
The Company reported an operating loss of
ended
month period ended
periods ended
costs not covered by the increased revenues.
Forgiveness of PPP loans and accrued interest
During the three months ended
and related
recorded as income relating to PPP loan.
Other Income - Federal Stimulus - Provider relief funds
As part of the CARES Act, two subsidiaries have received PRF payments. The
Company recognized
and 2021, respectively.
Income Taxes
No income tax expense and income tax expense of
recorded for continuing operations for the three months ended
and 2021, respectively.
Of the CARES Act provisions, the currently 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
guidance as of the preparation of the
PRF (to the extent the applicable terms and conditions required to retain the
funds are met "Retainable PRF") are fully includable in taxable income in the
Company's tax returns in the fiscal year received. ERC are included in taxable
income in the quarter in which the payroll expenses 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
associated with
22
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forgiven PPP loan proceeds. It is the Company's assumption at
that all PPP 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.
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. For purposes of evaluating our valuation
allowances, we have disregarded unusual items associated with the CARES Act
discussed above, the Company's history of losses, as well as the underlying
negative business conditions for rural healthcare businesses in which our
Healthcare Services Segment businesses operate and have recognized none of our
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
The loss from continuing operations after income tax was
months ended
after income tax of
loss from continuing operations this year compared to the prior year income from
continuing operations was due to the non-reoccurrence of the PPP loan
forgiveness this year.
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, 2021
Discontinued Operations
substantially all the assets of four hospitals and a nursing home ("Sold
Facilities") during the period
income taxes on the Sold 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, 2022
Net Earnings (Loss)
Net loss for the three months period ended
of
fully diluted share) for the three months period ended
23
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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 of 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.
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. Through the date of this filing, we have received
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 $ 41 $ 359 $ 1
2 years 3 351 0
3 years 0 327 0
4 years 0 124 0
5 years 0 11 0
Over 5 years 0 0 0
$ 44 $ 1,172 $ 1
As of
The Company expects to purchase approximately
by the Pharmacy segment (to be rented to customers) during the next twelve
months. The timing and actual amount which will be expended is difficult to
predict due to various factors including varying demand for such equipment as
well as its availability given current supply sourcing challenges. Other capital
expenditures for replacement and upgrade of current facilities and equipment of
the Healthcare Services and Pharmacy segments will be needed during the next
twelve months although there is no estimate of those expenditures. The Company
anticipates funding such expenditures primarily from cash on hand. The Company
has filed for
we have collected
the remaining
for the next 12 months currently are expected to be in-line with expenditures
for the quarter ended
administrative cost increases, and other settlements of cost reports in the
ordinary course of business, and the Company's ability to retain unrecognized
CARES Act grants, PPP funds and ERC funds received or previously received. Other
than reported above, there have been no material changes outside the ordinary
course of business relating to our upcoming cash obligations which have occurred
during the three months ended
scheduled cash expenditures (based on current operating levels) for long-term
debt, operating leases, and interest on current outstanding debt, the debt, the
specific items previously disclosed here, 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
24
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materials, price increases or inventory adjustments, beyond those discussed
herein); however, we are unable to predict with any degree of accuracy when, or
the extent to which, recent inflationary price trends, labor disruptions and
supply chain challenges in 2021 and 2022 will mitigate.
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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