Executive Summary

Net revenues rose to $1.60M (+$0.92M y/y) driven by the Hospital segment; operating loss was -$3.71M. Diluted EPS was -$0.66. Management highlighted the shift to rural hospital operations and continued cost controls .
Net loss ballooned to -$146.8M, primarily due to a $139.8M loss from the revaluation of derivative liabilities tied to down-round features and warrant resets as the share price rose from $0.003 to $0.009 during the quarter .
Hospital segment delivered $1.56M in net revenue and served 2,598 patients; Clinical Laboratory net revenue shrank to $0.05M as the company pivoted away from toxicology toward hospital operations .
Liquidity remains critically strained: cash $35k, working capital deficit -$174.8M, with monthly fixed costs of ~$1.5–$2.0M; management expects to rely on additional financing and asset sales (including spin-offs) to fund operations .
Post-quarter, the second hospital acquisition in Jamestown, TN closed on June 1, 2018 (historical net annual revenue ~$15M, >60% Medicare/Medicaid payor mix), strengthening the rural hospital strategy and potential revenue base .

What Went Well and What Went Wrong

What Went Well

The hospital strategy showed traction: Hospital net revenues reached $1.56M and patient volume was 2,598, underscoring demand recovery at Big South Fork Medical Center .
Operating discipline: General & administrative expenses declined by ~$0.43M y/y (-13%), reflecting headcount reductions and consolidation efforts initiated in 2017 .
Strategic expansion: “Our second hospital acquisition confirms our determination to expand our business model...” — Seamus Lagan, CEO; Jamestown hospital closed June 1, adding an ~$15M revenue base with predictable government payors .

What Went Wrong

Severe GAAP net loss driven by derivative liability revaluation (-$139.8M), reflecting warrant anti-dilution features and share price moves; materially distorts bottom-line comparability .
Clinical Laboratory contraction: Net revenues fell to $0.05M (from $0.68M y/y), as toxicology volumes were curtailed and payer reimbursement constraints persisted .
Liquidity crisis: Cash $35k, working capital deficit -$174.8M; defaults and judgments on legacy capital leases and notes persisted, necessitating extensions and forbearance agreements .

Financial Results

Metric	Q1 2017	Q3 2017	Q1 2018
Net revenues ($USD)	$684,265	$1,400,000	$1,601,661
Operating income (EBIT) ($USD)	-$3,556,257	-$5,200,000	-$3,712,024
Net loss from continuing operations ($USD)	-$48,638,415	-$10,500,000	-$146,786,377
Diluted EPS ($USD)	-$0.66	-$10.90	-$0.66

Segment performance and profitability:

Segment	Q1 2017 Net Revenues ($USD)	Q1 2017 Loss from Operations ($USD)	Q1 2018 Net Revenues ($USD)	Q1 2018 Loss from Operations ($USD)
Hospital Operations	$0	-$467,316	$1,556,075	-$1,472,600
Clinical Laboratory Operations	$684,265	-$1,292,275	$45,586	-$756,083

Key KPIs:

KPI	Q1 2017	Q1 2018
Hospital: Patients served (#)	N/A	2,598
Hospital: Net revenue per patient ($)	N/A	$598.95
Hospital: Direct costs per patient ($)	N/A	$796.36
Lab: Insured tests performed (#)	5,116	705
Lab: Net revenue per insured test ($)	$133.75	$64.66
Lab: Revenue recognition % of gross billings	13%	13%

Notes:

ASC 606 adoption treats bad debt similar to contractual adjustments; reserve of $591,323 reduced hospital sales to report net revenues of $1.60M in Q1’18 .
EBIT margin (loss from operations as % of revenue) was -519.7% in Q1’17 and -169.3% in Q1’18, per MD&A presentation .

Guidance Changes

The company did not issue quantitative revenue, margin, OpEx, or tax guidance in the Q1 2018 press release or 10-Q .

Metric	Period	Previous Guidance	Current Guidance	Change
Company-level financial guidance	FY 2018	N/A	No formal guidance provided	N/A

Earnings Call Themes & Trends

No Q1 2018 earnings call transcript was available; themes below reflect press releases and the 10‑Q.

Topic	Previous Mentions (Q3 2017)	Current Period (Q1 2018)	Trend
Rural hospital strategy	Reopening Big South Fork; CMS certification; expectation to restore >2015 revenue levels; predictable Medicare/Medicaid revenue	Hospital drove $1.56M net revenue and 2,598 patients; Jamestown acquisition completed 6/1 with ~$15M historical net revenue, >60% gov’t payors	Strengthening
Revenue recognition & bad debt	Early startup collection rate assumptions; 10–20% collectible in startup months	ASC 606 adoption; $591k bad debt reserve; net revenue $1.60M vs $2.19M gross hospital sales	Methodology clarified
Spin-offs (AMSG, HTS)	Plans announced; timing shifted	Classified as held-for-sale; spin-offs targeted for H2 2018; discontinued ops presented	Advancing
Legal/regulatory	Eleventh Circuit win vs CIGNA on standing; awaiting resolution	Legal matters ongoing; disclosures maintained; IRS audit; FL DOR payment schedule; lease judgments	Ongoing
Liquidity/financing	Raised $4.0M preferred; $9.0M notes; expectation for near-term cash flow break-even post collections	Cash $35k; working capital deficit -$174.8M; raised $2.0M debentures; continued conversions/exercises; monthly fixed costs ~$1.5–$2.0M	Deteriorated

Management Commentary

“Our second hospital acquisition confirms our determination to expand our business model into a sector where the provision of needed services is less reliant on an expensive sales strategy and more reliant on management of inherently predictable revenues and related costs.” — Seamus Lagan, CEO .
“We look forward to adding additional services and revenue by more fully utilizing the capacity of beds and floor space in our current hospitals and will continue to pursue other acquisitions and opportunities...” — Seamus Lagan .
On 2017 and strategy reset: “We succeeded on the refocusing of Rennova Health’s business model... The opening of our first hospital was the result of a year of planning and investment... We believe we have now repositioned [the lab] sector... to grow in other areas of diagnostic testing that offer a more reliable opportunity for payment.” — Seamus Lagan .
Spin-offs rationale: “The strategic goal of the spinoffs is to create three (or two) public companies... The Company has invested in excess of approximately $20 million... and believes that these businesses will deliver better value for our shareholders as separate companies.” — Seamus Lagan .

Q&A Highlights

No Q1 2018 earnings call transcript was available; Q&A highlights not applicable.

Estimates Context

Wall Street consensus estimates (EPS, revenue) via S&P Global were unavailable for RNVA for Q1 2018; comparisons to consensus cannot be made.

Key Takeaways for Investors

Hospital segment is the near-term revenue engine; Q1’18 net revenues $1.56M with 2,598 patients, while lab revenues shrank materially as strategy refocused .
Bottom line volatility is overwhelmingly driven by non-operational derivative liability fair value changes (-$139.8M), obscuring operating trends; investors should focus on segment revenues and operating loss rather than GAAP net loss .
Liquidity risk is acute (cash $35k; working capital deficit -$174.8M); equity and convertible instruments (warrants, preferred) remain central to funding; dilution risk is high .
Post-quarter Jamestown acquisition adds an ~$15M historical net revenue base with >60% government payors; proximity to Oneida (38 miles) offers potential operational synergies .
Operating discipline improved (G&A down ~13% y/y), but hospital direct costs per patient ($796) exceeded net revenue per patient ($599) in Q1, highlighting the need to optimize pricing, payer contracts, and collections .
Spin-offs (AMSG, HTS) progressed to held-for-sale/discontinued ops; execution could provide non-dilutive funding or strategic separation benefits if completed in H2 2018 .
With no formal guidance and absent consensus estimates, trading is likely catalyst-driven (acquisition integration, payer collections, financing), and operational KPIs (patients served, rev/patient) should be monitored for trajectory .

Rennova Health, Inc. (RNVA)·Q1 2018 Earnings Summary