Overview of Regional Health Properties, Inc.

Regional Health Properties, Inc. is a real estate investment company that focuses on healthcare facilities, primarily skilled nursing facilities (SNFs) and senior housing. As of December 31, 2024, the company had investments of approximately $52.8 million in 11 healthcare properties across five states.

The company operates through two segments: Real Estate and Healthcare Services. The Real Estate segment consists of the company’s real estate investments, while the Healthcare Services segment includes an entity set up to operate the company’s facilities as needed.

Financial Performance

In 2024, Regional Health Properties reported total revenues of $18.3 million, up 6.8% from $17.2 million in 2023. This increase was driven by a 27.6% rise in patient care revenues in the Healthcare Services segment, which offset a 0.9% decline in rental revenues.

However, the company’s net loss improved from $3.9 million in 2023 to $3.2 million in 2024, a 17.2% decrease. This was due to a reduction in credit loss expense and other cost savings, which offset the increase in patient care expenses.

The company’s EBITDA (earnings before interest, taxes, depreciation, and amortization) increased from $1.5 million in 2023 to $1.7 million in 2024. Adjusted EBITDA, which excludes certain one-time items, decreased from $3.9 million in 2023 to $3.5 million in 2024.

Segment Performance

Real Estate Segment The Real Estate segment’s revenues decreased slightly from $7.1 million in 2023 to $7.0 million in 2024, due to the transition of the Mountain Trace facility to the Healthcare Services segment. General and administrative expenses for this segment decreased by 12.5% due to the lack of expenses related to the management of the UVMC properties in 2024.

Healthcare Services Segment The Healthcare Services segment saw a significant increase in patient care revenues, up 27.6% to $11.3 million in 2024 from $8.8 million in 2023. This was due to higher patient reimbursement rates, increased facility census, and the transition of the Mountain Trace facility to this segment. However, patient care expenses also increased by 18.3% due to higher staff wages and the Mountain Trace transition.

General and administrative expenses for the Healthcare Services segment increased by 43.1%, driven by the costs associated with the Mountain Trace facility transition.

Liquidity and Capital Resources

As of December 31, 2024, the company had $0.6 million in unrestricted cash and $3.4 million in net accounts receivable. The company is seeking to improve its liquidity through measures such as refinancing or repaying debt, increasing future lease revenue, modifying lease terms, and reducing expenses.

During 2024, the company’s cash provided by operating activities was $1.9 million, down from $3.7 million in 2023, primarily due to the timing of accounts payable and accrued expense payments.

The company had $49.7 million in indebtedness as of December 31, 2024, and anticipates net principal repayments of approximately $7.0 million during the next twelve-month period. This includes $1.4 million in routine debt service amortization, $1.3 million in payments on other non-routine debt, $4.1 million in payments related to a forbearance agreement, and a $0.2 million payment of bond debt.

The company’s common stock and Series A Preferred Stock were previously listed on the NYSE American but were suspended from trading on February 5, 2025 due to not meeting certain listing requirements. The securities are currently listed on the OTC Market, which could negatively impact the company’s ability to raise capital.

Strengths and Weaknesses

Strengths:

• Diversified portfolio of healthcare real estate assets
• Increasing patient care revenues in the Healthcare Services segment
• Reduction in credit loss expense and other cost savings

Weaknesses:

• Continued net losses, although improving
• Reliance on debt financing and potential liquidity challenges
• Suspension of NYSE American listing and trading on the OTC Market

Outlook and Future Prospects

Regional Health Properties is pursuing measures to improve its liquidity and financial performance, including refinancing debt, increasing lease revenues, and reducing expenses. The company’s ability to execute on these plans will be crucial to its future success.

The transition of the Mountain Trace facility to the Healthcare Services segment appears to have been a positive move, as it contributed to the segment’s revenue growth. However, the associated increase in costs will need to be carefully managed.

The company’s delisting from the NYSE American and move to the OTC Market could make it more difficult to raise capital and attract investors, which could hinder its ability to fund future growth and investments.

Overall, Regional Health Properties faces a mix of challenges and opportunities. Its success will depend on its ability to stabilize its operations, improve its financial position, and find ways to grow and diversify its business in the evolving healthcare real estate market.