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RH

REGIONAL HEALTH PROPERTIES, INC (RHE)·Q4 2021 Earnings Summary

Executive Summary

  • Q4 2021 revenue was $6.439M, down slightly quarter-over-quarter (Q3: $6.702M) but up year-over-year in rental revenues, with diluted EPS at $(1.66) versus $(1.93) in Q4 2020 .
  • Rental revenues rose 20.0% YoY to $4.113M (Q4 2020: $3.427M), while patient care revenues were $2.041M (new segment commenced Jan 1, 2021) .
  • Occupancy declined to 65.1% with rent coverage pressured by agency staffing; rent collections fell to 94.1% in Q4 (vs. 97.4% in Q3), indicating operational stress from Omicron and staffing shortages .
  • The company commenced an exchange offer for Series A Preferred Shares to streamline capital structure; this is a potential stock catalyst if executed, given significant quarterly preferred dividends of $2.249M impacting common EPS .

What Went Well and What Went Wrong

What Went Well

  • Rental revenue increased 20.0% YoY to $4.113M, reflecting stabilization and sublease variable/straight-line rent offsets following the Wellington Transition .
  • Net loss improved YoY: company net loss narrowed to $(0.661)M (Q4 2020: $(1.013)M); diluted EPS improved to $(1.66) (Q4 2020: $(1.93)) .
  • Management initiated the Series A Preferred exchange offer to simplify the capital structure: “position the company for future success… well-positioned to weather industry challenges” (CEO) .

What Went Wrong

  • Occupancy fell to 65.1% and Quality Mix to 27.6%, with rent coverage pressured (1.69x before fees; 1.20x after) due to increased agency staffing costs stemming from Omicron and staffing shortages .
  • Rent collections declined to 94.1% of contractual cash versus 97.4% in Q3, signaling near-term operator stress .
  • Patient care expense of $2.332M exceeded patient care revenues of $2.041M in Q4, indicating negative contribution from the operated Tara facility in the quarter .

Financial Results

Quarterly Performance vs Prior Periods

MetricQ2 2021Q3 2021Q4 2021
Total Revenues ($USD Millions)$6.468 $6.702 $6.439
Rental Revenues ($USD Millions)$3.763 $4.136 $4.113
Patient Care Revenues ($USD Millions)$2.445 $2.309 $2.041
Income from Operations ($USD Millions)$0.548 $0.628 $0.287
Net Loss ($USD Millions)$(0.503) $(0.039) $(0.661)
Net Loss Attributable to Common ($USD Millions)$(2.752) $(2.289) $(2.910)
Diluted EPS ($USD)$(1.62) $(1.27) $(1.66)
Weighted Avg Shares (Millions)1.697 1.775 1.775

Year-over-Year (Q4 2021 vs Q4 2020)

MetricQ4 2020Q4 2021
Rental Revenues ($USD Millions)$3.427 $4.113
Total Revenues ($USD Millions)$3.725 $6.439
Net Loss ($USD Millions)$(1.013) $(0.661)
Diluted EPS ($USD)$(1.93) $(1.66)

Actual vs Consensus (Q4 2021)

MetricActualConsensus (S&P Global)Surprise
Revenue ($USD Millions)$6.439 UnavailableN/A
Diluted EPS ($USD)$(1.66) UnavailableN/A

Consensus estimates via S&P Global were unavailable for RHE in Q4 2021.

Segment and Cost Breakdown

MetricQ2 2021Q3 2021Q4 2021
Real Estate Services – Rental Revenues ($USD Millions)$3.763 $4.136 $4.113
Healthcare Services – Patient Care Revenues ($USD Millions)$2.445 $2.309 $2.041
Facility Rent Expense ($USD Millions)$1.639 $1.640 $1.545
Patient Care Expense ($USD Millions)$2.254 $2.454 $2.332

KPIs

KPIQ2 2021Q3 2021Q4 2021
Rent Coverage Before Mgmt Fees (x)1.71 1.71 1.69
Rent Coverage After Mgmt Fees (x)1.22 1.23 1.20
Occupancy %67.7% 66.7% 65.1%
Quality Mix %29.3% 28.8% 27.6%
Rent Collections (% of contractual cash)97.1% 97.4% 94.1%

Balance Sheet Snapshot

MetricQ3 2021Q4 2021
Cash ($USD Millions)$6.233 $6.792
Restricted Cash ($USD Millions)$3.393 $3.056
Total Assets ($USD Millions)$107.024 $105.696
Operating Lease Obligation ($USD Millions)$33.066 $32.059
Total Debt Outstanding (net) ($USD Millions)$53.4 $52.9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Capital Structure – Series A Preferred Exchange OfferQ4 2021NoneCommenced exchange offer to streamline capital structureNew initiative
Operations – Meadowood Assisted Living FacilityApril 1, 2022Tenant-operatedPlans underway to operate facility absent securing new tenant (license loss)New plan
Formal Financial Guidance (Revenue, Margins, OpEx, Tax, Dividends)Q4 2021NoneNone providedMaintained (no formal guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q2 2021)Previous Mentions (Q-1: Q3 2021)Current Period (Q4 2021)Trend
Capital Structure (Exchange Offer)Pursuing reconfiguration of equity; engaging with SEC and investors Ongoing efforts; confidence in solutions for both classes of equity Commenced Series A Preferred exchange offer Progressing
Occupancy & StaffingOccupancy 67.7%; COVID disruption referenced Occupancy 66.7%; navigating industry headwinds Occupancy 65.1%; Omicron and staffing shortages weighed on coverage Deteriorating
Rent Collections97.1% of contractual cash collected 97.4% collected 94.1% collected Down
Operator TransitionsWellington Transition; began operating Tara facility Tara under new management; Empire Care transition Meadowood involuntary lease termination; plan to operate Ongoing transitions
RefinancingsSecured refinancing commitments on ~$4.1M debt Completed two refinancings; HUD filings expected Not highlightedCompleted/Stable
Regulatory/Legal——Tenant license loss at Meadowood; operational contingency Emerging risk

Management Commentary

  • “Occupancy rates were relatively flat in the fourth quarter as a result of the Omicron variant and healthcare staffing shortages. Rent coverage metrics were weighed down by increased use of agency staffing… We remain optimistic these industry pressures will abate in the coming months.” — Brent Morrison, CEO .
  • “We’re pleased to have completed the refinancing of two facilities this quarter and four HUD refinancings are expected to be filed in the coming months.” — Ben Waites, CFO (Q3) .
  • “Both the equity and debt capital structure improvements… should allow the Company to move into a growth mode and take advantage of opportunities presented by the COVID-19 disruption.” — Ben Waites, CFO (Q2) .

Q&A Highlights

Not applicable — no earnings call transcript was available for Q4 2021 in the document set.

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2021 EPS and revenue was unavailable for RHE.
  • In absence of consensus, investors should anchor on actuals and operational KPIs: modest sequential revenue decline, lower rent collections, and reduced occupancy suggest cautious near-term expectations .

Key Takeaways for Investors

  • Rental revenue resilience (up 20% YoY) contrasted with softer occupancy and rent collections in Q4 due to Omicron and staffing, indicating stable property cash flows but near-term operator pressure .
  • Patient care operations at Tara were negative in Q4 (expense $2.332M vs revenue $2.041M), underscoring execution risk when RHE operates facilities directly .
  • Preferred dividends ($2.249M per quarter) materially depress common EPS; successful completion of the exchange offer is a pivotal catalyst for equity value normalization .
  • Liquidity improved: cash rose to $6.792M with total debt modestly lower; completed/committed refinancings in Q2/Q3 help de-risk maturities and interest cost .
  • Watch rent collections and occupancy in early 2022; improvement could support rent coverage recovery and reduce credit concerns; deterioration would pressure common EPS further .
  • Operational transitions (Meadowood) and tenant changes introduce short-term volatility; execution on new management/operator plans is key .
  • Near-term trading: stock likely sensitive to updates on the preferred exchange progress and any evidence of occupancy/rent collection stabilization; medium-term thesis hinges on capital structure simplification and steady real estate cash flows .