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SELECTIS HEALTH, INC. (GBCS)·Q1 2021 Earnings Summary

Executive Summary

  • Record revenue of $5.76M (+49.6% y/y) and positive net income of $0.24M ($0.01 diluted EPS) as Healthcare Services expanded despite low census and COVID headwinds .
  • Operating cash flow was negative (-$0.66M) due to reopening costs (Oklahoma City Park Place), onetime weather-related repairs in Tulsa, and COVID expenditures; PPP forgiveness ($0.676M) and other income ($0.432M) offset operating losses .
  • Management highlighted reopening of Oklahoma City (106 beds) with CMS certification process underway, rebranding to Selectis Health, and a plan to get all locations cash flow positive within 18 months .
  • Near-term catalysts: HUD refinancing (targeting an $8.2M mortgage close, extensions on others), Tulsa repair completion (~60 days), COVID tailwinds and census recovery over 3–6 months per facility; risk: ~$13M debt maturing in 2021 and elevated G&A as operator model scales .

What Went Well and What Went Wrong

What Went Well

  • Reopened Oklahoma City (Park Place) with 106 licensed beds; CMS certification process initiated and first private pay residents onboarded .
  • Healthcare revenue rose 61% y/y, supporting record total revenue and positive EPS despite COVID impacts .
  • Equity improved to $3.65M from $3.41M (+7%) and management deployed a new expense/accounting platform to accelerate closes and analytics .

Selected quotes:

  • “We officially reopened our Oklahoma facility… began accepting private pay patients… begin our Centers for Medicare and Medicaid Services (‘CMS’) certification process” .
  • “Our health care revenue increased 61% from the same period last year” .
  • “Total Global or Selectis shareholder equity increased from $3.4 million to $3.6 million, a 7% increase” .

What Went Wrong

  • Low census across operations due to COVID outbreaks in late Dec–Jan; management expects 3–6 months recovery period per facility and similar near-term impact in Q2 .
  • Tulsa facility experienced significant cold-weather damage; census reduced until repairs complete (~60 days), and Park Place renovations faced added costs from extreme cold .
  • Operating cash flow (-$0.66M) driven by reopening costs and onetime items (~$0.45M), while G&A ratio rose to 36.4% from 8.9% y/y on the shift to operating facilities .

Financial Results

MetricQ1 2020Q4 2020Q1 2021
Revenue ($USD)$3,851,601 —$5,762,843
Net Income ($USD)$53,600 (to common) —$240,556 (to common)
Diluted EPS ($USD)$0.00 —$0.01
Total Operating Expenses ($USD)$3,283,524 —$6,068,214
Net Income Margin % (normalized)——4.17%
Cash from Operations ($USD)$252,424 —$(664,847)

Notes:

  • Q4 2020 quarterly revenue/EPS not disclosed in the documents reviewed; company provided annual FY data in the 10-K but no quarter-specific totals .

Segment revenue breakdown

SegmentQ1 2020Q1 2021
Real Estate Services (Rental Revenue) ($USD)$521,012 $390,386
Healthcare Services Revenue ($USD)$3,330,589 $5,372,457
Total Revenue ($USD)$3,851,601 $5,762,843

KPIs

KPIQ1 2021
Facilities owned13
Beds (operating / leased / total)628 / 422 / 1,050
Average occupancy (Total)60%
Average occupancy by stateAR 74%; GA 80%; OK 52%
Cash and Equivalents ($USD)$3,378,862
Restricted Cash ($USD)$410,866

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Facility cash flow statusNext 18 months (from May 2021)Not providedTarget to have all locations cash flow positive over next 18 months New
Debt refinancing (HUD and lenders)2021 maturities (~$13M)Not providedIn HUD queue; aim to close ~$8.2M by July; other two mortgages indicated for extension New/Active
Tulsa census recovery post repairs~60 daysNot providedRepairs limiting census; full census targeted post completion New
CMS certification (Oklahoma City)2021Not providedCMS certification process initiated; billing to begin post certification New
PPP loan forgivenessFY 2021Not providedRecognized $0.676M; anticipate at least $0.12M additional New
Formal revenue/margin guidance2021NoneNone provided in 8-K/10-Q/callMaintained (none)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q1 2021)Trend
COVID impact and censusQ2 2020: strong revenue; rebrand and operational enhancements . Q4 2020: acquisition press releases; no census specifics .Low census post outbreaks; 3–6 months recovery per facility; COVID tailwind expected .Recovery phase underway; expect gradual normalization.
Technology/expense platformQ2 2020: strengthening management and timely reporting initiatives .New expense platform and accounting software; faster closes and real-time analytics .Infrastructure upgraded to support scale.
Rebranding and footprintQ2 2020: rebranding to Selectis Health planned; facility reopening planned late Q1 2021 .Selectis branding implemented; Oklahoma City reopened (106 beds); exploring expansions in GA and OK .Execution progressing as planned.
Debt strategy & refinancingPrior: not detailed; acquisition finance noted .HUD queue and lender extensions; line-of-credit in process; minimal cash usage planned .Proactive refinancing/extension to bridge maturities.
Regulatory/legal backdropNot detailed in prior press releases.Multiple legal matters disclosed; COVID regulatory environment and CARES/Provider Relief context expanded in 10-Q .Ongoing compliance/mitigation focus.
Tulsa operationsNot previously flagged.Weather damage increased costs; census reduced for ~60 days until repairs complete .Near-term headwind, transitory.

Management Commentary

  • “On average, we found it takes 3 to 6 months to fully recover from an outbreak per facility. We still have some lingering effects… and we expect to have similar results in the second quarter” .
  • “We officially reopened our Oklahoma facility… have 106 licensed beds… and began accepting private pay patients… we will begin our CMS certification process” .
  • “Total shareholder equity increased from $3.4 million to $3.6 million… Operating cash flow used… negative $664,000… primarily due to reopening and lower revenues and increased costs due to COVID” .
  • “It is more likely than not that the company will be the new operator of [Warrenton and Sparta] facilities” (Georgia) .
  • “The future of the company is bright… We hope to get all of our locations cash flow positive over the next 18 months” .

Q&A Highlights

  • Debt maturities and refinancing: Management expects to close an ~$8.2M HUD mortgage by July and extend two other mortgages; current properties are performing and should be extended .
  • Subordinated debt and high-coupon notes: Plan to refinance via HUD, line-of-credit, and a Tulsa liquidity event rather than using cash; aim for lower interest rates .
  • Onetime/Q1 charges: ~$450,000 onetime costs tied to COVID, Park Place reopening, and extreme cold weather impacts; expect normalization except for ongoing Tulsa upgrades .
  • Census trajectory: Census worsened from 12/31 due to COVID; Eastman ~89–90% recovered; Tulsa off ~30 patients until repairs; company to add census as a reported metric going forward .

Estimates Context

  • Wall Street consensus estimates via S&P Global for Q1 2021 EPS and revenue were unavailable through our tool access at the time of analysis; as a result, comparisons to consensus are omitted. Values would normally be retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue inflection with operator model scaling: Healthcare Services drove record sales and positive EPS; watch occupancy recovery and margin normalization as COVID impacts recede .
  • Near-term operational headwinds appear transitory: Tulsa weather repairs (~60 days) and post-COVID census rebuild (3–6 months/facility) should fade through Q2–Q3; Oklahoma City CMS certification/billing is a tangible upside driver .
  • Liquidity management and refinancing are pivotal: ~$13M 2021 maturities targeted for HUD refinance/extension; closing timelines and terms are key to de-risking the balance sheet .
  • Cash flow path: Negative operating cash in Q1 driven by onetime items; management targets all locations cash flow positive within 18 months—monitor Q2/Q3 cash from operations and capex cadence .
  • G&A scaling: Higher G&A ratio reflects operator model transition; look for efficiency gains from the new expense/accounting platform to improve run-rate SG&A .
  • Policy support and PPP forgiveness helped offset costs: PPP forgiveness ($0.676M) recognized; additional ~$0.12M anticipated—one-off support, not recurring .
  • Trading implications: Near-term results may be noisy (repairs, census rebuild); catalysts are HUD closings, CMS certification, and occupancy prints—position sizing should consider refinancing execution risk and working capital deficit .

Additional Q1 2021 Press Releases and Prior Quarter Materials

  • Appointment of President and COO (Randy Barker) effective Jan 1, 2021 .
  • Acquisition of Fairland (OK) facility (closing Dec 31, 2020; press release Jan 4, 2021) .
  • Prior quarter trend context: Second quarter 2020 press release—revenue $5.13M; EPS $0.04; highlighted rebranding and facility reopening plans .