Regional Health Properties, Inc. (NYSE American: RHE) is a self-managed real estate investment company that primarily invests in real estate purposed for long-term care and senior housing. The company operates through two reportable segments: Real Estate and Healthcare Services.
Business Overview
Regional Health's Real Estate segment consists of real estate investments in skilled nursing and senior housing facilities, which the company leases to third-party tenants on a triple-net basis. The Healthcare Services segment, on the other hand, comprises the company's own operation of the Meadowood and Glenvue facilities.As of March 31, 2024, Regional Health had investments of approximately $67.2 million in eleven healthcare real estate properties and one leased property. The company currently owns eleven properties, consisting of nine skilled nursing facilities and two multi-service facilities. Nine facilities are leased to third-party operators on a triple-net basis, one is managed by an external manager, and one is managed internally by the company. The company also has one leased facility that is subleased to a third-party operator.
Financials
For the fiscal year ended December 31, 2023, Regional Health reported annual revenue of $17.16 million, a decrease from the previous year's $18.42 million. The company's net loss for the year was $3.89 million, compared to a net loss of $4.24 million in the prior year. Despite the challenging environment, the company's annual operating cash flow was $3.71 million, and its annual free cash flow was $2.75 million.In the first quarter of 2024, the company's total revenues increased by 5.7% to $4.13 million, compared to $3.91 million in the same period of 2023. This growth was primarily driven by a 20.5% increase in patient care revenues, which reached $2.31 million in Q1 2024, up from $1.92 million in Q1 2023. Rental revenues also increased by 6.4% to $1.82 million in Q1 2024, compared to $1.71 million in the prior-year quarter.
The company's net loss for the first quarter of 2024 was $0.96 million, a significant improvement from the $1.99 million net loss reported in the same period of 2023. This improvement was largely due to a 9.5% decrease in patient care expenses and a 45.7% reduction in total other expenses, net.
Liquidity
As of March 31, 2024, Regional Health had $0.8 million in unrestricted cash and $1.5 million in net accounts receivable, primarily consisting of patient accounts receivable and rent receivables. During the first quarter of 2024, the company's net cash provided by operating activities was $0.6 million, mainly due to the timing of accounts payable and accrued expense payments.The company had $50.0 million in indebtedness, net of $1.0 million in deferred financing costs and unamortized discounts, as of March 31, 2024. Regional Health anticipates net principal repayments of approximately $1.7 million during the next twelve-month period, including $1.5 million in routine debt service amortization and a $0.1 million payment of bond debt.
Debt Covenant Compliance
As of March 31, 2024, the company was in compliance with the various financial and administrative covenants related to its outstanding credit facilities, except for one immaterial non-compliance, which was cured after the balance sheet date.Series A Preferred Stock Exchange Offer
In June 2023, Regional Health successfully completed an exchange offer, where the company exchanged any and all outstanding shares of its 10.875% Series A Cumulative Redeemable Preferred Shares for newly issued shares of its Series B Preferred Stock. This transaction eliminated $50.4 million in accumulated and unpaid dividends on the Series A Preferred Stock, providing the company with additional liquidity.Segment Performance
Real Estate Services Segment The Real Estate Services segment, which consists of the leasing and subleasing of long-term care and senior living facilities to third-party tenants, generated $1.82 million in rental revenues during the first quarter of 2024, up from $1.71 million in the same period of 2023. This 6.4% increase was primarily due to the extension of the Greenfield lease and the increase in rent from the Southland facility.Healthcare Services Segment The Healthcare Services segment, which comprises the company's operation of the Meadowood and Glenvue facilities, reported patient care revenues of $2.31 million in the first quarter of 2024, a 20.5% increase from $1.92 million in the same period of the previous year. This growth was mainly driven by a change in the Medicaid reimbursement rate paid for the Glenvue facility.
Patient care expenses for the Healthcare Services segment decreased by 9.5% to $2.10 million in Q1 2024, compared to $2.32 million in Q1 2023, primarily due to cost containment measures at the Glenvue and Meadowood facilities.