Executive Summary

Mixed quarter: revenue rose YoY on the addition of patient care revenues from the Tara Facility but declined sequentially; operating margin compressed sharply as consulting costs and preferred stock exchange expenses weighed on results .
Total revenues were $6.47M (+42.5% YoY; -8.7% QoQ), operating margin fell to 8.5% (from 23.8% in Q2’20 and 15.8% in Q1’21), and diluted EPS was $(1.62) vs $(1.09) a year ago and $(1.32) last quarter .
Liquidity and collections remained solid: 97.1% cash rent collected in Q2; unrestricted cash ended at $5.63M; management secured refinancing commitments on $4.1M of near-term maturities .
Strategic catalyst: management is pursuing a capital structure reconfiguration via an exchange of Series A Preferred into common; if executed, management believes it can “unlock value” and support a shift to growth mode .

What Went Well and What Went Wrong

What Went Well
- Rent collections were resilient at 97.1% in Q2, supporting cash flows despite pandemic-related pressures .
- Liquidity and liability management: ended Q2 with $5.63M of cash and secured refi commitments on $4.1M of debt coming due in 3Q21/3Q22 .
- Strategic progress on capital structure: “pursuing a process to reconfigure the Company’s capital structure…to exchange our Series A Preferred shares for common shares,” which management believes will “unlock value” and enable growth .
What Went Wrong
- Margin compression: operating margin declined to 8.5% from 23.8% in Q2’20 and 15.8% in Q1’21, reflecting consulting, stock-based comp, and preferred exchange-related costs .
- Sequential revenue decline: total revenues fell 8.7% QoQ to $6.47M as patient care revenues moderated vs Q1 and rental revenues trended down YoY .
- EPS deterioration: diluted EPS to common was $(1.62) vs $(1.32) in Q1 and $(1.09) a year ago, with undeclared preferred dividends of $2.25M per quarter continuing to pressure common EPS .

Financial Results

Headline metrics (oldest → newest)

Metric	Q2 2020	Q1 2021	Q2 2021
Total Revenues ($M)	$4.54	$7.08	$6.47
Income from Operations ($M)	$1.08	$1.12	$0.55
Operating Margin (%)	23.8% (1.08/4.54)	15.8% (1.12/7.08)	8.5% (0.55/6.47)
Net (Loss) Income ($M)	$0.41	$0.02	$(0.50)
Diluted EPS ($)	$(1.09)	$(1.32)	$(1.62)

Growth vs prior periods

Metric	YoY (Q2’21 vs Q2’20)	QoQ (Q2’21 vs Q1’21)
Total Revenues	+42.5% (6.47/4.54-1)	-8.7% (6.47/7.08-1)
Operating Margin (pp)	-15.3 pp (8.5% vs 23.8%)	-7.3 pp (8.5% vs 15.8%)
Diluted EPS	Worse by $0.53 ($(1.62) vs $(1.09))	Worse by $0.30 ($(1.62) vs $(1.32))

Revenue mix (oldest → newest)

Revenue Component ($M)	Q2 2020	Q1 2021	Q2 2021
Patient Care Revenues	$0.00	$2.69	$2.45
Rental Revenues	$4.29	$4.08	$3.76
Management Fees	$0.24	$0.25	$0.25
Other Revenues	$0.00–$0.01	$0.06	$0.01
Total Revenues	$4.54	$7.08	$6.47

Select P&L drivers

Item ($M)	Q2 2020	Q1 2021	Q2 2021
Patient Care Expense	$0.00	$2.20	$2.25
Facility Rent Expense	$1.64	$1.64	$1.64
G&A Expense	$0.71	$1.04	$0.95
Interest Expense (net)	$0.68	$0.69	$0.67
Other (Expense) Income, net	$(0.01)	$0.39 (expense)	$0.32 (expense)

Balance sheet and collections

Metric	Q4 2020	Q1 2021	Q2 2021
Unrestricted Cash ($M)	$4.19	$6.20	$5.63
Restricted Cash ($M)	$3.31	$2.99	$2.97
Total Debt Outstanding ($M)	$54.4	$54.4	$54.2
Cash Rent Collected	91% (FY20)	97.2% (Q1’21)	97.1% (Q2’21)

KPIs (portfolio; excludes 3 managed OH facilities)

KPI	Q4 2020	Q1 2021	Q2 2021
Occupancy %	67.3%	68.6%	67.7%
Quality/Skilled Mix %	28.4%	29.6%	29.3%
Rent Coverage (pre-mgmt fees)	1.77x	1.65x	1.71x
Rent Coverage (post-mgmt fees)	1.28x	1.17x	1.22x

Context and notable items

Rental revenues declined 12.3% YoY to $3.76M due to prior sublease terminations (Wellington Transition); patient care revenue of $2.45M reflects operation of the Tara Facility beginning January 1, 2021 .
Q2 included ~$0.33M of expenses tied to capital structure efforts (preferred exchange), included in Other expense, net; G&A also rose YoY on consulting and stock-based comp .

Guidance Changes

No formal quantitative financial guidance (revenue, margins, EPS, capex, tax, etc.) was provided or updated in Q2 2021 press materials. Management focused commentary on capital structure (preferred exchange), refinancing activity, and operating metrics/collections.

Metric	Period	Previous Guidance	Current Guidance	Change
Company financial guidance (Revenue/EPS/Margins)	FY/Q2 2021	None provided	None provided	Maintained (no guidance)
Capital structure actions	2021	Exploring options	Pursuing preferred-for-common exchange; filed S-4; engaging investors	New detail/process update

Earnings Call Themes & Trends

Note: No earnings call transcript was available in our document set for Q2 2021. Themes below reflect press releases and 8-Ks.

Topic	Previous Mentions (Q4’20 and Q1’21)	Current Period (Q2’21)	Trend
Capital structure (Preferred exchange)	Exploring improvements; management change and positioning for refi/cap structure actions	Actively pursuing exchange of Series A Preferred to common; S-4 filed; expect value unlock	Escalating action
Rent collections	91% collected for FY20; all expected contractual rent collected through Mar’21	97.1% cash rent collected in Q2	Improving/stable
Occupancy and skilled mix	67.3%/28.4% in Q4’20; early signs of improvement with vaccine reopening	67.7%/29.3% in Q2’21; modest sequential softness vs Q1	Mixed (flat to slightly softer)
Refinancing	Opportunities to refi HUD/non-HUD loans under evaluation	Refunding commitments secured on $4.1M of maturities (3Q21/3Q22)	Positive progress
COVID-19 impact/macro	Headwinds noted; expectation for improvement with re-openings	Continued normalization; operating metrics monitored (coverage/occupancy)	Gradual normalization

Management Commentary

“I’m excited to say we are pursuing a process to reconfigure the Company’s capital structure, and have already engaged with both the SEC and our investor base to exchange our Series A Preferred shares for common shares. We believe this transaction will unlock value for the company and benefit all stakeholders.” — Brent Morrison, CEO .
“Both the equity and debt capital structure improvements that we are pursuing should allow the Company to move into a growth mode and take advantage of opportunities presented by the COVID-19 disruption.” — Ben Waites, CFO .
Prior quarter: “We are pleased to report a slight increase to our Operator’s occupancy levels and improvements in our rent collections… we are seeing further positive improvement in occupancy levels.” — CEO; refi opportunities “are moving along.” — CFO .

Q&A Highlights

No Q&A section provided due to lack of an earnings call transcript for Q2 2021 in our document set.

Estimates Context

Wall Street consensus (S&P Global) for Q2 2021 EPS and revenue was unavailable for RHE at the time of this analysis (S&P Global mapping for the ticker was not found via our estimates tool). As a result, we cannot quantify beats/misses versus consensus this quarter.

Key Takeaways for Investors

Sequential softness with structural progress: revenue down 8.7% QoQ but capital structure and refinancing initiatives advanced, which could be a medium-term equity re-rating catalyst if preferred exchange completes .
Margin reset: operating margin compressed to 8.5% on consulting/stock comp and preferred exchange costs; absent these items, core margins could normalize as Tara operations scale and COVID-related frictions abate .
Durable collections: 97.1% rent collections and stable interest expense underpin cash flows; cash remains adequate at $5.63M while total debt modestly declined .
Portfolio KPIs mixed: occupancy ticked down vs Q1 but quality mix and rent coverage stayed within recent ranges; monitoring trajectory into H2 .
Strategic optionality: preferred-for-common exchange and debt refi may simplify the equity story, reduce risk, and enable growth investments; timing and terms will drive equity value impact .
Trading lens: absent consensus estimates, stock catalysts skew to corporate actions (exchange offer progress, definitive proxy effectiveness) and ongoing rent collection/occupancy prints; downside risks include prolonged margin pressure and any slippage in refi execution .

Supporting detail excerpts

Rental revenues fell 12.3% YoY to $3.76M due to the Wellington Transition; Tara patient care revenues were $2.45M in Q2; preferred exchange-related costs were ~$0.33M in Q2 .
Key KPIs: Q2 occupancy 67.7%, skilled mix 29.3%, rent coverage before/after fees 1.71x/1.22x .

REGIONAL HEALTH PROPERTIES, INC (RHE)·Q2 2021 Earnings Summary