Suwanee, GA-based Regional Health Properties on Tuesday said it had addressed some issues that “created substantial doubt regarding the company’s ability to continue as a going concern.”
In a quarterly filing with the Securities and Exchange Commission, the company said it repaid two loans on Aug. 1, which saved it from possibly declaring bankruptcy. Specifically, the company used part of the proceeds of the sale of four skilled nursing facilities to pay Pinecone Realty Partners $21.3 million and Congressional Bank $3.8 million.
The four SNFs sold to affiliates of MED Healthcare Partners were:
- Northwest Nursing Center, Oklahoma City, OK;
- Attalla Health & Rehab, Attalla, AL;
- Healthcare at College Park, College Park, GA; and
- Quail Creek Nursing Home, Oklahoma City, OK.
“As a result of such repayment, the company is able to conclude that it is probable that the company will be able to meet its obligations arising within one year of the date of issuance of these consolidated financial statements within the parameters set forth in the accounting guidance,” RHE said.
CEO Brent Morrison previously had described the facilities as “non-strategic business assets” and said payment of the loans was a step toward “greatly improving the company’s overall balance sheet metrics, total book value and overall cash position while having minimal impact to monthly cash flow.” RHE would be refocusing its efforts on the company’s more strategic assets, concentrated mostly in the Southeast and Midwest, as well as resolving a few remaining legacy lawsuits, he said.
Through Sept. 30, the company generated positive cash flow from continuing operations of $2.2 million, RHE reported. As of Sept. 30, however, the company had negative working capital of approximately $1.6 million — excluding $6.1 million of a current operating lease obligation — and $3.4 million in unrestricted cash and $55.8 million in indebtedness, including current maturities of $1.7 million, according to the SEC filing.
The company said it is trying to increase its operations, streamline its cost infrastructure and otherwise increase liquidity by: refinancing or repaying debt to reduce interest costs and mandatory principal repayments, increasing future lease revenue through acquisitions and investments in existing properties, modifying the terms of existing leases, replacing certain tenants that default on their lease payments, and reducing other expenses.
As of Sept. 30, the company owns two assisted living communities and 10 skilled nursing facilities, leases nine SNFs, and manages two SNFs and one independent living community for third parties.