Executive Summary

Rental revenue accelerated to $0.454M, up over 3x year-over-year, while operating income was modestly positive; net loss to common narrowed sequentially versus Q2 as portfolio scale increased .
Board introduced a regular quarterly dividend for 2015 of $0.01 per share; management targets stabilizing fixed costs at ~$0.135M per quarter starting Q1 2015, supporting free cash flow leverage as assets ramp .
Portfolio expanded to 11 properties in Q3 with five transactions completed, including the Meadowview acquisition funded by 6.5% convertible notes; total assets rose to $39.6M .
Near‑term revenue catalyst: Tulsa facilities expected to begin contributing from December 1, 2014 as licensing/renovations complete; lack of Street estimates limits formal beat/miss assessment .

What Went Well and What Went Wrong

What Went Well

Rental revenue grew more than three‑fold YoY; Q3 rental revenue $453,600 vs. $140,000 YoY as additional facilities came online .
Board approved regular dividends; “expects to pay at least one cent per share, per quarter, throughout 2015,” signaling confidence in portfolio cash generation .
Strategic expansion: “most active to date” quarter with five transactions; management plans to “double our portfolio in 2015” and transition to full ownership to simplify structure and capture economics .

What Went Wrong

Net loss to common of $(0.174)M persisted, driven by higher interest expense from debt-funded growth and acquisition costs; interest expense was $0.200M in Q3 .
General and administrative costs rose materially with public company compliance and growth, totaling $0.188M in Q3 vs. $0.028M YoY .
Tulsa campus did not contribute revenue in Q3 pending licensing and renovations, deferring expected rent to December 2014 and pressuring current-period margins .

Financial Results

Metric	Q3 2013	Q2 2014	Q3 2014
Revenue ($USD Thousands)	$140.0	$311.8	$453.6
Operating Income ($USD Thousands)	$63.1	$(60.0)	$19.5
Net Income (Loss) Attributable to Common ($USD Thousands)	$(60.6)	$(225.0)	$(174.2)
Basic EPS ($USD)	$(0.01)	$(0.01)	$(0.01)
Interest Expense ($USD Thousands)	$118.5	$126.0	$200.0
Acquisition Costs ($USD Thousands)	$0.0	$0.0	$68.7

Segment revenue capacity (lease rates at Q3 2014; monthly base rent straight‑lined):

Facility	Monthly Lease Income ($USD)	Lease Expiration	Notes
Middle Georgia (Eastman, GA)	$47,000	Jun 30, 2017	100 beds; 65% interest
Warrenton (Warrenton, GA)	$27,871	Jun 30, 2016	110 beds
Goodwill (Macon, GA)	$62,036	Dec 31, 2017	152 beds; escalates $1,200/yr
Edwards Redeemer (Oklahoma City, OK)	$45,062	Mar 31, 2018	106 beds; triple‑net
Providence of Sparta (Sparta, GA)	$19,782	Jun 30, 2016	71 beds; triple‑net
Greene Point (Union Point, GA)	$21,185	Jun 30, 2016	71 beds; triple‑net
Meadowview (Seville, OH)	$34,195	Oct 31, 2024	100 beds; acquired Sep 30, 2014

KPIs and balance sheet scale:

KPI	Value
Total properties owned/interests	11 facilities
Total Assets	$39.6M as of Sep 30, 2014
Total Equity (stockholders’ equity)	$10.47M as of Sep 30, 2014
Total Debt (Notes and Bonds Payable)	$24.83M as of Sep 30, 2014
Cash & Cash Equivalents	~$2.0M “today” (Nov 25, 2014 press release)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Regular quarterly dividend per share	FY 2015	None disclosed	At least $0.01 per share per quarter	Introduced
Fixed costs (quarterly)	Starting Q1 2015	Not specified	~$135,000/quarter expected stabilization	Introduced
Tulsa SNF rent start	Q4 2014	No revenue in Q2/Q3	Revenue recognition targeted to begin Dec 1, 2014	Timed clarification
Ownership structure	By end of March (2015)	Partial ownership in properties	Acquire minority interests to reach 100% ownership	Strategic shift
Portfolio growth	FY 2015	Growth underway	Plan to double portfolio during 2015	Raised ambition

Earnings Call Themes & Trends

Note: A Q3 2014 call was scheduled and webcast, but the full transcript was not available in the document tools; themes synthesized from press release and 10‑Q MD&A .

Topic	Previous Mentions (Q2 2014)	Current Period (Q3 2014)	Trend
Portfolio expansion	Added Goodwill; preparing Meadowview; Southern Hills bond financing	Five transactions closed; portfolio at 11; Meadowview acquired	Accelerating
Tulsa campus (licensing/renovations)	No rent recognized; renovations funded by bonds; capitalized interest	Rent expected from Dec 1; still no Q3 rent	Near‑term ramp
Dividend policy	None	Introduced regular $0.01/quarter for 2015	New shareholder return
Cost structure	G&A up for compliance; no fixed cost target	Fixed costs to stabilize at ~$135k/quarter from Q1 2015	Improving operating leverage
Financing/leverage	Debt increased for acquisitions; bond financing in Tulsa	Total debt $24.8M; 6.5% converts issued; balloon maturities noted	Higher leverage; refinancing focus
REIT election timing	Future election planned; not yet made	Still planned “in the future”	Unchanged

Management Commentary

“Total portfolio of healthcare related properties increased to 11... Rental revenue grew more than three‑fold year-over-year... Total assets rose to $39.6 million...” emphasizing rapid scaling and asset growth .
“The Board expects to pay at least one cent per share, per quarter, throughout 2015... Our organization is structured to scale effectively, without added administrative expense, enabling us to significantly expand free cash flow” highlighting capital allocation and operating leverage ambitions .
“Most of the expenses related to our startup efforts are now behind us, and we expect fixed costs to stabilize at approximately $135,000 per quarter beginning in the first quarter of 2015” providing explicit cost guidance .
“A key focus... is to acquire the minority interest in our properties... We expect to acquire the minority interests by the end of March” outlining simplification and control priorities .

Q&A Highlights

The Q3 2014 earnings call transcript was not available via the document tools. The press release provided webcast details but no transcript text; as such, specific analyst Q&A themes and clarifications cannot be cited .

Estimates Context

Wall Street consensus estimates (S&P Global/Capital IQ) for EPS and revenue in Q3 2014 were unavailable for GBCS based on tool access; GetEstimates returned an SPGI rate‑limit error and coverage for OTC microcaps is often limited. Consequently, formal beat/miss vs. consensus cannot be determined [GetEstimates error].

Key Takeaways for Investors

Revenue scaling is tangible: $0.454M rental revenue with additional facilities set to contribute in Q4, supporting sequential improvement potential .
Operating income turned positive in Q3 despite growth costs; fixed cost guidance ($0.135M/quarter) implies margin leverage as rents ramp .
Dividend initiation ($0.01/quarter in 2015) provides a shareholder‑return signal; sustainability hinges on executing Tulsa ramp and consolidating minority interests .
Balance sheet leverage is elevated ($24.83M debt); multiple balloon maturities within 12–24 months require proactive refinancing and cash flow coverage from leases .
Near‑term catalyst: first revenue from Tulsa SNF/ALF starting Dec 1; watch Q4 rent receipts and any delays in licensing/renovations .
Strategic focus on full ownership should simplify structure and improve economics; track progress by end of March timetable .
Absence of Street coverage limits consensus framing; trading likely reacts to operational milestones (rent commencement, refinancing updates, additional acquisitions) rather than estimate beats/misses [GetEstimates error].

SELECTIS HEALTH, INC. (GBCS)·Q3 2014 Earnings Summary