Financial Performance - Net revenues for the three months ended March 31, 2025, were $7,323,000, a decrease of 1.9% compared to $7,462,000 in the same period of 2024[75]. - Operating loss for the nine months ended March 31, 2025, was $2,889,000, representing a 66.4% increase from the operating loss of $1,736,000 in the same period of 2024[75]. - The company experienced a 5.5% decrease in net revenues for the nine months ended March 31, 2025, totaling $23,181,000 compared to $24,527,000 in the same period of 2024[75]. - Interest income for the three months ended March 31, 2025, increased by 252.6% to $67,000 compared to $19,000 in the same period of 2024[75]. - Total net revenues for the three months ended March 31, 2025 were $7,323 million, a decrease of 2% from $7,462 million in the same period of 2024[77]. - Pharmacy net revenues for the nine months ended March 31, 2025 decreased by $1,221 million or 5% compared to the same period in 2024, primarily due to lower retail pharmacy scripts filled[77]. - Operating loss for the three months ended March 31, 2025 was $683 million, an improvement from an operating loss of $853 million in the same period of 2024[80]. - The company recorded a net loss of $671 million for the three months ended March 31, 2025, compared to a net loss of $1,396 million for the same period in 2024[96]. Asset Sales and Impairments - The company recorded a gain of $5,584,000 on the sale of the Trace Extended Care Facility, which included sale expenses of $578,000[71]. - The company completed the sale of Trace Regional Hospital and related assets for a total of $2,500,000, with net proceeds of $1,832,000 received at closing[69]. - The company recorded an impairment loss of $1,974,000 at December 31, 2023, to reduce the net value of the Trace hospital assets[71]. - The company sold its IT subsidiary in January 2025 for $150 million, resulting in an impairment loss of $100 million recorded in the prior quarter[82]. Mergers and Acquisitions - The merger agreement with Regional Health Properties, Inc. involves the issuance of approximately 1,595,401 shares of Regional common stock and 1,408,121 shares of Regional's Series D Preferred Stock[68]. - The merger agreement between SunLink and Regional Health Properties involves the issuance of approximately 1,595,401 shares of Regional common stock and 1,408,121 shares of Series D Preferred Stock with an initial liquidation preference of $12.50 per share[99]. Operational Challenges - The company faced challenges in hiring qualified employees and rising labor costs, impacting operations negatively due to the aftermath of the COVID-19 pandemic[74]. Cash and Liquidity - The company had unrestricted cash on hand of $7,466 million at March 31, 2025, indicating adequate liquidity to support operations for the next twelve months[97]. - The company plans to fund its expenditures primarily from cash on hand, with expected cash expenditures for the next twelve months in line with the fiscal year ended June 30, 2024[102]. Costs and Expenses - Costs and expenses for the three months ended March 31, 2025 were $8,006 million, down from $8,315 million in the same period of 2024[78]. - Cost of goods sold as a percentage of net revenues was 57.8% for the three months ended March 31, 2025, compared to 58.2% for the same period in 2024[79]. Tax and Legal Matters - The company recognized a valuation allowance of $8,648 million against deferred tax assets as of March 31, 2025, indicating a lack of expected realizable future taxable income[86]. - Legal expenses to a law firm associated with a former director amounted to $170,000 and $96,000 for the three months ended March 31, 2025 and 2024, respectively[103]. - Total legal expenses to the same law firm for the nine months ended March 31, 2025 and 2024 were $447,000 and $220,000, respectively[103]. - Outstanding legal expenses to the law firm were $204,000 and $156,000 as of March 31, 2025, and June 30, 2024, respectively[103]. Discontinued Operations - Loss from discontinued operations after income taxes was $41 million for the three months ended March 31, 2025, significantly reduced from a loss of $572 million in the same period of 2024[90]. Capital Expenditures - The pharmacy business expects to purchase approximately $800,000 of capitalizable DME over the next twelve months, with a $50,000 capital commitment for upgrading its drug compounding facility[100]. - Other capital expenditures for the pharmacy business are anticipated to be lower than those in fiscal years 2024 and 2023, although specific estimates are not provided[102]. Market Risk - The company has not engaged in transactions using derivative financial instruments and believes its exposure to market risk is not material[104].

Financial Performance - Net revenues for the three months ended December 31, 2024, were $7,935, a decrease of 6.8% compared to $8,510 for the same period in 2023[73] - For the six months ended December 31, 2024, net revenues were $15,858, down 7.1% from $17,065 in the prior year[73] - Operating loss for the three months ended December 31, 2024, was $1,012, representing a 133.7% increase from a loss of $433 in the same period of 2023[73] - Pharmacy net revenues decreased by $623 or 7% for the three months ended December 31, 2024, compared to the same period in 2023[73] - The company reported a loss from continuing operations before income taxes of $1,070 for the three months ended December 31, 2024, compared to a loss of $404 in the prior year[73] - The company recorded a net loss of $1,343 for the three months ended December 31, 2024, compared to a net loss of $3,075 for the same period in 2023, showing an improvement in net loss year-over-year[92] Costs and Expenses - Total costs and expenses for the three months ended December 31, 2024, were $8,947, slightly up from $8,943 in 2023, while for the six months, costs rose to $18,064 from $17,948[74] - The cost of goods sold as a percentage of net revenues increased to 58.2% for the three months ended December 31, 2024, compared to 56.0% in 2023, reflecting rising operational costs[75] Asset Sales and Losses - The company recorded a loss of $962 on the sale of Trace Regional Hospital assets during the year ended June 30, 2024[68] - The company completed the sale of Trace Extended Care Facility for approximately $7,100, resulting in a gain of $5,584 for the fiscal year ended June 30, 2024[68] - The company recorded a pre-tax gain of $665 from the sale of a minority equity investment in a subsidiary during the six months ended December 31, 2024[78] - The company sold its IT subsidiary in January 2025 for $150, with an impairment loss of $100 recorded at December 31, 2024[77] Mergers and Acquisitions - The merger agreement with Regional Health Properties, Inc. involves the issuance of 1,410,000 shares of Regional common stock and preferred stock[65] - The company announced a merger agreement with Regional Health Properties, Inc., which involves the issuance of 1,410,000 shares of common stock and preferred stock, subject to shareholder and regulatory approvals[96] Liquidity and Cash Position - The liquidity position of the company was $8,020 in unrestricted cash as of December 31, 2024, which is deemed adequate to support operations for the next twelve months[94] - The company has reported no material changes in cash obligations during the six months ended December 31, 2024[97] - Cash expenditures for the next twelve months are expected to align with those for the fiscal year ended June 30, 2024, subject to potential increases in operating and administrative costs[97] - There are ongoing uncertainties related to the aftereffects of the COVID-19 pandemic and asset sales that may impact future cash expenditures[97] Legal Expenses - Legal expenses to a related law firm amounted to $116,000 and $102,000 for the three months ended December 31, 2024 and 2023, respectively[99] - Total legal expenses to the same law firm for the six months ended December 31, 2024 and 2023 were $277,000 and $289,000, respectively[99] - Outstanding legal expenses to the law firm were $116,000 and $156,000 as of December 31, 2024, and June 30, 2024, respectively[99] Future Expectations and Commitments - The Company expects its pharmacy business to purchase approximately $800 million of capitalizable DME over the next twelve months[97] - A capital commitment of $50 million is allocated for upgrading the drug compounding facility[97] - Other capital expenditures for the pharmacy business are anticipated to be lower than those in fiscal years 2024 and 2023[97] - The Company has not engaged in transactions using derivative financial instruments, indicating minimal exposure to market risk[100] - The company recognized a valuation allowance of $8,517 against deferred tax assets as of December 31, 2024, indicating a lack of expected future taxable income[82]

Financial Performance - Net revenues for the three months ended September 30, 2024, were $7,923,000, a decrease of 7.4% from $8,555,000 in the same period of 2023[62]. - Pharmacy net revenues decreased by $632,000 or 7% compared to the same period last fiscal year, attributed to lower retail pharmacy scripts filled and lower durable medical equipment orders shipped[64]. - Operating loss for the three months ended September 30, 2024, was $1,194,000, a significant increase of 165.3% from a loss of $450,000 in the same period of 2023[62]. - Loss from continuing operations before income taxes was $442,000 for the three months ended September 30, 2024, compared to a loss of $426,000 in the same period of 2023, representing a 3.8% increase[62]. - The company's net loss for the three months ended September 30, 2024, was $549, or a loss of $0.08 per fully diluted share, compared to a net loss of $1,344, or a loss of $0.19 per fully diluted share for the same period in 2023[78]. - The loss from discontinued operations after income taxes was $107 for the quarter ended September 30, 2024, compared to a loss of $916 for the same period in 2023[73]. Costs and Expenses - Costs and expenses for the three months ended September 30, 2024, were $9,117,000, compared to $9,005,000 in 2023, reflecting a 1.2% increase[65]. - The cost of goods sold as a percentage of net revenues increased to 56.5% in Q3 2024 from 55.8% in Q3 2023, while salaries, wages, and benefits rose to 38.9% from 30.6%[66]. Asset Sales and Gains - The company recorded a gain of $694,000 on the sale of assets during the three months ended September 30, 2024[62]. - The company completed the sale of the Trace Extended Care Facility for approximately $7,100,000, resulting in net proceeds of approximately $6,522,000 retained for working capital[59]. - The company recorded a gain of $5,584 during the fiscal year ended June 30, 2024, from the sale of the Trace Extended Care Facility, with net proceeds of approximately $6,522 retained for working capital[75]. - The company sold its minority equity ownership investment in a subsidiary for cash of $1,064, resulting in a pre-tax gain of $665 for the quarter ended September 30, 2024[68]. Cash and Liquidity - The company expects to use existing cash primarily to sustain operations and fund activities related to extraordinary transactions when available[59]. - The company had unrestricted cash on hand of $7,529 at September 30, 2024, and expects to receive approximately $1,932 from the sale of Trace Real Estate on October 9, 2024[79]. Future Expectations and Investments - The company anticipates purchasing approximately $800 of capitalizable durable medical equipment (DME) over the next twelve months, subject to demand and supply challenges[82]. - Contractual obligations related to noncancelable operating leases at September 30, 2024, totaled $488, with $339 due within one year[81]. Operational Metrics - Institutional pharmacy scripts filled increased by 10% in the three months ended September 30, 2024, compared to the same period in 2023[64]. - The company recorded a loss of $962,000 on the Trace Hospital Assets Sale during the year ended June 30, 2024[59]. - For the three months ended September 30, 2024, the company reported an operating loss of $1,194, compared to an operating loss of $450 for the same period in 2023, attributed to a 7% decrease in net revenues[67]. - The company recognized a valuation allowance of $8,183 against deferred tax assets as of September 30, 2024, indicating that it is unlikely to realize these assets due to historical tax losses[71].

Revenue and Income - Revenue sources for the year ended June 30, 2024, included Medicare at 44.8%, Medicaid at 20.4%, and commercial insurance and other sources at 34.8%[117] - A 1% change in net revenues during fiscal year 2024 would result in an after-tax income change of approximately $324,000 or diluted earnings per share of $0.05[115] - If the overall estimated contractual discount percentage on commercial revenues during 2024 were changed by 1%, the after-tax income from continuing operations would change by approximately $40,000[117] - Net revenues for the fiscal year ended June 30, 2024, were $32,440, a decrease of 5.4% from $34,280 in 2023[124] - The company reported a net loss of $1,527 for the year ended June 30, 2024, compared to a net loss of $1,795 for the year ended June 30, 2023, indicating a reduction in loss of approximately 15%[136] Operating Performance - Operating loss for the fiscal year ended June 30, 2024, was $2,411 compared to an operating profit of $74 in 2023, representing an increase in loss of $2,485[127] - Total scripts filled increased by 6.0%, while Durable Medical Equipment (DME) sales orders decreased by 5.2% for the year ended June 30, 2024[125] - Retail pharmacy sales decreased by 14.2% for the year ended June 30, 2024, due to a 12.0% decrease in per script net revenues[125] - Institutional pharmacy sales increased by 2.2% for the year ended June 30, 2024, due to a 9.7% increase in per script net revenues[125] - Net revenues from discontinued operations decreased to $7,980 in fiscal year 2024 from $13,690 in fiscal year 2023, representing a decline of approximately 41%[135] - Operating loss from discontinued operations improved to a loss of $2,142 in fiscal year 2024 compared to a loss of $2,536 in fiscal year 2023[135] Cost and Expenses - Cost of goods sold as a percentage of net revenues increased to 56.3% in 2024 from 54.2% in 2023[126] - Salaries, wages, and benefits as a percentage of net revenues increased to 32.6% in 2024 from 29.6% in 2023[126] Cash Flow and Liquidity - The company has unrestricted cash on hand of $7,170 as of June 30, 2024, which is the primary source of liquidity for operational needs[137] - The company anticipates funding capital expenditures primarily from cash on hand, with no estimate for other capital expenditures expected to be lower than fiscal years 2024 and 2023[138] - The company is currently unaware of trends or uncertainties likely to cause a material change in its cash expenditures beyond the next twelve months[138] Assets and Liabilities - Intangible assets include an indefinite-lived trade name valued at $1,180 as of June 30, 2024, and 2023[118] - The reserve for professional and general liability claims as of June 30, 2024, is $333, compared to $190 in 2023[121] - Total increases for professional and general liability coverage were $569 for the year ended June 30, 2024, and $386 for 2023[121] - The company recognized a valuation allowance of $8,287 against deferred tax assets, resulting in no net long-term deferred income tax asset at June 30, 2024[129] - The company had approximately $24,458 of estimated net operating loss carry-forwards available for future use, expiring primarily between fiscal years 2025 and 2038[131] - The complexity of claims and the extended period to settle them complicate the estimation process for professional and general liability reserves[121] Insurance and Risk Management - The company has maintained insurance for individual malpractice claims exceeding a self-insured retention amount[120] - Changes in insurance costs may affect the self-insurance retention level chosen each year[120] - The reserve for professional and general liability claims reflects the current estimate of all outstanding losses, including incurred but not reported losses[120] Future Projections - Future cash flow estimates are based on assumptions regarding revenue and expense growth rates, patient volumes, and changes in payor mix[119] - The company expects to purchase approximately $1,000 of capitalizable durable medical equipment (DME) in the next twelve months[138] - An impairment loss of $1,974 was reported at December 31, 2023, to reduce the net value of the Trace hospital assets to the sale proceeds under the revised agreement[133] - The sale of the Trace Extended Care & Rehab facility generated net proceeds of approximately $6,522, which will be retained for working capital and general corporate purposes[133] - The company has no outstanding debt as of June 30, 2024[138]

Financial Performance - Net revenues for the three months ended March 31, 2024, were $7,462,000, a decrease of 8.8% compared to $8,181,000 in the same period of 2023[74]. - Operating loss for the three months ended March 31, 2024, was $872,000, an increase of 86.7% from a loss of $467,000 in the prior year[74]. - Earnings from continuing operations before income taxes for the three months ended March 31, 2024, were a loss of $853,000, compared to a loss of $459,000 in the same period of 2023, representing an increase of 85.8% in losses[74]. - The net loss for the three months ended March 31, 2024, was $1,396 million, or a loss of $0.20 per fully diluted share, compared to a net loss of $762 million, or $0.11 per fully diluted share, for the same period in 2023[89]. - The company reported an operating loss of $853 million for the three months ended March 31, 2024, compared to an operating loss of $467 million for the same period in 2023[79]. Costs and Expenses - Costs and expenses for the three months ended March 31, 2024, were $8,334,000, a decrease of 3.6% from $8,648,000 in the same period of 2023[74]. - Costs and expenses, including depreciation and amortization, were $8,334 million for the three months ended March 31, 2024, compared to $8,648 million for the same period in 2023[76]. - Cost of goods sold as a percentage of net revenues increased to 58.2% for the three months ended March 31, 2024, compared to 58.1% for the same period in 2023[77]. - Salaries, wages, and benefits as a percentage of net revenues increased to 35.5% for the three months ended March 31, 2024, compared to 31.1% for the same period in 2023[77]. Operational Challenges - The company experienced rising labor and supply costs, along with supply chain challenges, impacting its operations negatively[73]. - The company expects to continue facing adverse effects from the COVID-19 pandemic, particularly in terms of workforce shortages and inflationary pressures[70]. Corporate Strategy - The company plans to actively pursue extraordinary corporate transactions, including potential mergers or sales of non-performing assets[64]. - The company continues to evaluate its underperforming segments and may consider dispositions to better position itself for future transactions[66]. - The company is in the process of selling Trace Regional Hospital and related assets for a total of $2,500,000, with the sale expected to be completed by July 31, 2024[65]. Cash and Liquidity - The company had unrestricted cash on hand of $1,211 million at March 31, 2024, as a primary source of liquidity for operational needs[90]. - Cash expenditures for the next twelve months are expected to align with expenditures for the nine months ended March 31, 2024, subject to potential increases in operating and administrative costs[93]. - The Company is unaware of trends likely to cause material changes in cash expenditures beyond the next twelve months[94]. Legal Expenses - Legal services expenses to a related law firm amounted to $96,000 and $35,000 for the three months ended March 31, 2024 and 2023, respectively[95]. - Outstanding legal expenses to the law firm were $154,000 and $36,000 as of March 31, 2024, and June 30, 2023, respectively[95]. Other Financial Information - The company reported a net interest income of $19,000 for the three months ended March 31, 2024, an increase of 137.5% from $8,000 in the same period of 2023[74]. - The company recognized a valuation allowance of $9,499 million against deferred tax assets as of March 31, 2024, indicating that it is unlikely to realize these assets[82]. - The loss from discontinued operations after income taxes was $572 million for the three months ended March 31, 2024, compared to a loss of $309 million for the same period in 2023[85]. - Pharmacy net revenues for the nine months ended March 31, 2024, decreased by $1,711 million or 7% to $24,527 million compared to $26,270 million for the same period in 2023[75]. - The Company expects to purchase approximately $800 million of capitalizable DME by the Pharmacy segment over the next twelve months[93]. - Other capital expenditures for the Pharmacy business are anticipated to be at a lower level than fiscal years 2023 and 2022[93]. - The Company has not entered into transactions using derivative financial instruments and believes exposure to market risk is not material[96].

Financial Performance - Net revenues for the three months ended December 31, 2023, were $8,510,000, a decrease of 20.0% compared to $10,640,000 in the same period of 2022[73]. - Operating loss for the three months ended December 31, 2023, was $(433,000), a decline of 119.1% from an operating profit of $2,270,000 in the prior year[73]. - The company experienced a 5.7% decrease in net revenues for the six months ended December 31, 2023, totaling $17,065,000 compared to $18,089,000 in the same period of 2022[73]. - Earnings from continuing operations before income taxes for the three months ended December 31, 2023, were $(404,000), a decline of 117.8% from $2,276,000 in the same period of 2022[73]. - Total net revenues for the three months ended December 31, 2023, were $8,510 million, a decrease of 20% from $10,640 million in the same period of 2022[75]. - Pharmacy net revenues decreased by $2,105 million or 20% for the three months ended December 31, 2023, compared to the same period in 2022[75]. - Net loss for the three months ended December 31, 2023, was $3,075 million, compared to net earnings of $1,951 million for the same period in 2022[91]. - Costs and expenses increased by 6.8% to $(8,943,000) for the three months ended December 31, 2023, compared to $(8,370,000) in the same period of 2022[73]. - Costs and expenses for the three months ended December 31, 2023, were $8,943 million, an increase from $8,370 million in the same period of 2022[76]. - Cost of goods sold as a percentage of net revenues increased to 56.0% for the three months ended December 31, 2023, compared to 42.4% in the same period of 2022[77]. - Loss from discontinued operations after income taxes was $2,668 million for the three months ended December 31, 2023, compared to a loss of $326 million for the same period in 2022[86]. Cash and Liquidity - Unrestricted cash on hand was $2,055 million at December 31, 2023, serving as a primary source of liquidity[92]. - The company plans to use existing cash primarily to sustain operations and fund extraordinary transactions when appropriate[66]. - The company expects to purchase approximately $800 million of capitalizable DME during the next twelve months[95]. Legal and Compliance - The company incurred legal expenses of $102,000 and $130,000 for services from a related law firm in the three months ended December 31, 2023, and 2022, respectively[97]. - For the six months ended December 31, 2023, and 2022, the company expensed $289,000 and $185,000 for legal services from the same law firm[97]. - Outstanding legal expenses to the law firm were $126,000 and $36,000 as of December 31, 2023, and June 30, 2023, respectively[97]. Market Position and Strategy - The company is in the process of marketing for sale the Trace Extended Care & Rehabilitation facility, which is considered an asset held for sale[65]. - The company aims to pursue extraordinary corporate transactions, including potential mergers or acquisitions, to enhance its market position[65]. Operational Challenges - The company continues to face challenges from the COVID-19 pandemic, including workforce shortages and rising labor costs[73]. - The company is currently unaware of trends or uncertainties likely to cause material changes in cash expenditures beyond the next twelve months[96]. - There are no known future increases in costs of labor or materials that could materially affect the relationship between costs and revenues[96]. - The company is unable to predict the extent to which inflationary price trends and supply chain challenges will mitigate[96]. - The company has not engaged in transactions using derivative financial instruments, indicating minimal exposure to market risk associated with financial instruments[98]. Interest Income - Interest income for the three months ended December 31, 2023, rose significantly to $29,000, an increase of 480.0% from $5,000 in the prior year[73]. Valuation and Tax - The company recognized a valuation allowance of $9,164 million against deferred tax assets as of December 31, 2023[82].

Financial Assistance and Credits - The company received approximately $6,182 in Provider Relief Funds (PRF) under the CARES Act from April 1, 2020, to September 30, 2023, with $6,162 recognized as other income[80]. - The company applied for and received Employee Retention Credit (ERC) of $3,586 for the first and second quarters of 2021 due to decreased gross receipts[81]. - The company is subject to Federal audits regarding PRF distributions and must comply with terms to retain the funds received[82]. - The company continues to monitor compliance with the terms of the ERC program and the impact of the pandemic on revenues and expenses[81]. Business Operations and Strategy - The company plans to focus on improving operations and achieving profitability in its existing Pharmacy business, which may include selective acquisitions or dispositions of underperforming subsidiaries[73]. - The company believes certain portions of its businesses continue to underperform and is open to selling underperforming assets when deemed appropriate[74]. - The company has experienced material reductions in demand and net revenues in its Healthcare business due to the COVID-19 pandemic and its aftermath[78]. - The company has faced increased costs and operational inefficiencies in its Pharmacy business due to the pandemic[79]. Financial Performance - Net revenues for the three months ended September 30, 2023, were $8,555 million, a 14.8% increase from $7,449 million in the same period of 2022[87]. - Operating loss decreased to $450 million for the three months ended September 30, 2023, compared to a loss of $617 million in the prior year, reflecting a 27.1% improvement[92]. - Pharmacy net revenues increased by $1,122 million or 16% year-over-year, driven by a $321 million sales tax refund and increased retail and institutional scripts filled[87]. - Medicare revenues rose to $3,830 million, up from $3,262 million, while Medicaid revenues increased to $1,650 million from $1,604 million[87]. - Total costs and expenses for the three months ended September 30, 2023, were $9,005 million, an 11.6% increase from $8,066 million in the prior year[89]. - The company recorded a net loss of $1,344 million, or $0.19 per fully diluted share, compared to a net loss of $1,558 million, or $0.22 per fully diluted share, for the same period in 2022[105]. Cash and Capital Expenditures - The company had unrestricted cash on hand of $2,820 million as of September 30, 2023, primarily funding working capital needs[106]. - The Company expects to purchase approximately $800 million of capitalizable DME by the Pharmacy segment over the next twelve months[111]. - Other capital expenditures for the Pharmacy business are anticipated to be at a lower level than fiscal years 2023 and 2022[111]. - The Company plans to fund expenditures primarily from cash on hand, with cash expenditures expected to align with those for the three months ended September 30, 2023[111]. - The Company is unaware of any trends or uncertainties likely to cause a material change in cash expenditures beyond the next twelve months[111]. Sale of Subsidiaries - The company signed an agreement to sell its subsidiary that operates Trace Regional Medical Center for approximately $8,000, expected to close by December 15, 2023[73]. - The company expects to close the sale of Trace Regional Medical Center for approximately $8,000 million by December 15, 2023, subject to customary closing conditions[102]. - A subsidiary, Crown Healthcare Investments, LLC, is set to sell Trace Regional Health System for approximately $8 million, with the sale scheduled to close on December 15, 2023[112]. Legal and Compliance - Legal services expenses to a related law firm amounted to $187,000 and $55,000 for the three months ended September 30, 2023 and 2022, respectively[113]. - Outstanding legal expenses to the law firm were $185,000 and $36,000 as of September 30, 2023, and June 30, 2023, respectively[113]. - The Company has not engaged in transactions using derivative financial instruments and believes its exposure to market risk is not material[113]. Taxation - Income tax expense for continuing operations was recorded at $2 million for the three months ended September 30, 2023, compared to no income tax recorded in the same period of 2022[93]. - The company has approximately $26,541 million of estimated net operating loss carry-forwards available for future use, expiring primarily between fiscal years 2023 and 2038[97].

Medicare and Medicaid Reimbursement - Medicare reimbursement rates for inpatient services increased by 2.9% for FFY 2023 and are projected to increase by 3.1% for FFY 2024[54] - A significant portion of the company's net revenues is dependent on reimbursement from Medicare and Medicaid programs[51] - The company operates under fixed payment systems for Medicare and Medicaid, which may not cover the actual costs of providing services[34] - Medicare outpatient services update factor for 2023 was 3.8%, and for 2024, it is proposed to be 2.8%[56] - Medicaid outpatient services are reimbursed at 85.6% of the costs associated with providing care[63] - The Protecting Access to Medicare Act (PAMA) reduced the Medicare per diem rate by 2% starting October 1, 2018[77] - Legislative proposals may impose further limitations on government and private payments to healthcare providers[81] Financial Performance and Capital Expenditures - The company spent approximately $2,470 in capital expenditures during fiscal years 2022 and 2023 to upgrade and expand its facilities[48] - The hospital received Upper Payment Limit (UPL) payments of $366 million in fiscal 2023, up from $60 million in fiscal 2022[60] - The amount of bad debts treated as allowable costs is currently 35%[58] - The effective rate for disproportionate share payments has been 12.0% of DRG payments in recent years[59] - Mississippi has initiated efforts to reduce Medicaid assistance payments, impacting the financial condition of the hospital[62] Staffing and Labor Challenges - The company faces challenges in attracting qualified staff due to a small labor market, exacerbated by the COVID-19 pandemic[35] - The potential implementation of national minimum nurse staffing standards in nursing homes could increase operational costs and adversely affect profit margins[98] Competition and Market Dynamics - The average occupancy rates of rural facilities, including Trace, continue to be negatively affected by payor-required pre-admission authorization and increased competition[48] - The company competes with other healthcare facilities based on quality of care, reputation, and location, with substantial price competition for private payment residents[41] - The company’s pharmacy segment competes with retail and institutional pharmacies, focusing on location, convenience, and service quality[42] Pharmacy Operations and Regulations - The Pharmacy segment's operations are affected by Medicare reimbursement rules, which have reduced payments for certain products and services, potentially impacting profitability[84] - The average sales price (ASP) methodology is used for Medicare Part B drugs, with reimbursement levels set at ASP plus 5% for outpatient settings[87] - The competitive bidding program for durable medical equipment (DME) is expected to decrease the number of companies serving Medicare beneficiaries, impacting the Pharmacy segment's operations[84] - Non-government reimbursement arrangements have negatively affected the Pharmacy segment, as major payors and pharmacy benefit managers (PBMs) reduce payments and limit independent pharmacies[91] - The company faces challenges in expanding its Pharmacy operations outside Louisiana due to state regulations on out-of-state pharmacies[102] - The company relies on wholesale suppliers and manufacturers for pharmaceuticals, and disruptions in these sources could adversely impact revenues and profitability[105] Compliance and Regulatory Issues - Compliance with federal fraud and abuse regulations is critical, as violations could lead to termination from Medicare and Medicaid programs[107] - The company maintains compliance programs directed at regulatory compliance, including physician recruitment and reimbursement practices[126] - The company has implemented tailored HIPAA privacy policies and training programs across all subsidiaries[119] - HIPAA regulations impose civil penalties of $1 per incident, up to a maximum of $25 per person, per year, per standard violated[117] - The company has developed a comprehensive disaster contingency plan for each facility to ensure compliance with HIPAA security regulations[123] - The company expects to comply with new unique health identifiers regulations once proposed rules are issued, with a potential transition period of one to two years[124] - The company has a toll-free hotline for employees to report compliance concerns anonymously[126] Insurance and Liability - Professional malpractice liability insurance is maintained in commercially reasonable amounts believed to be sufficient for current operations[127] - The recorded liability for professional liability risks includes estimates based on actuarially determined amounts[128] Environmental Compliance - The company is in substantial compliance with applicable federal, state, and local environmental regulations, with no material effect on operations[129] - Compliance costs related to medical waste disposal are not anticipated to have a material adverse effect on cash flows or financial position[125]

Financial Assistance and Funding - The Company received approximately $6,182 in Provider Relief Funds (PRF) from April 1, 2020, to March 31, 2023, with $5,713 recognized as other income[68]. - The Company obtained $3,234 in Paycheck Protection Plan (PPP) loans during the quarter ended June 30, 2020, all of which have been forgiven as of March 31, 2023[69]. - The Company applied for Employee Retention Credit (ERC) of $3,586 due to a decrease in gross receipts and has received all applied amounts[70]. - The company received a total of $9,416 under the CARES Act programs, including $6,182 in PRF and $3,234 in PPP loans[102]. - The Company continues to monitor compliance with terms and conditions of PRF, PPP, and ERC funding, which are subject to federal audits[71]. Impact of COVID-19 - The Company experienced material reductions in demand and net revenues in its Healthcare business due to the COVID-19 pandemic, alongside increased costs for medical supplies and staffing[66]. - The Company faces uncertainties and risks related to the COVID-19 pandemic, which have affected its ability to resume normal business strategies[61]. - The company believes it has adequate financing and liquidity to support operations through the next twelve months, despite uncertainties related to COVID-19[103]. Financial Performance - Total net revenues for the three months ended March 31, 2023, were $11,533 million, a 9.6% increase from $10,527 million in the same period of 2022[78]. - Healthcare Services net revenues decreased by $217 million (5.8%) for the three-month period but increased by $674 million (6.4%) for the nine-month period ended March 31, 2023, compared to the prior year[78][79]. - Pharmacy segment net revenues increased by $1,223 million (18.0%) for the three months and $4,825 million (23.1%) for the nine months ended March 31, 2023, compared to the same periods in 2022[80]. - Operating loss for the three months ended March 31, 2023, was $774 million, an improvement of 27.3% compared to a loss of $1,064 million in the same period of 2022[85]. - Loss from continuing operations after income tax for the three months ended March 31, 2023, was $727 million, compared to a loss of $934 million in the same period of 2022[95]. - Net loss for the three months ended March 31, 2023 was $762, compared to a net loss of $990 for the same period in 2022, representing a 23% improvement[99]. - Net loss for the nine months ended March 31, 2023 was $369, a decline from net earnings of $356 in the same period in 2022[99]. Costs and Expenses - Costs and expenses for the three months ended March 31, 2023, were $12,307 million, a 6.2% increase from $11,591 million in the same period of 2022[83]. - The Company acknowledges the impact of inflation on operating costs and the ability to achieve cash flow and profitability, particularly due to fixed payments from government programs[55]. Operational Strategy - The Company plans to focus on improving operations and achieving profitability in its existing Healthcare Services and Pharmacy businesses while pursuing selective acquisitions[61]. - The company expects to purchase approximately $1,000 of capitalizable DME in the next twelve months, subject to demand and supply challenges[105]. - The company anticipates funding capital expenditures primarily from cash on hand, with no significant changes expected in cash obligations beyond the next twelve months[105]. Market Challenges - The company is challenged by the competitive nature of the U.S. healthcare market and the need to attract and retain qualified staff[55]. - The company has not undertaken any obligation to publicly update or revise forward-looking statements, which may differ from actual future results[60]. Legal and Financial Position - The company reported a valuation allowance of $7,906 million against deferred tax assets as of March 31, 2023[92]. - Contractual obligations related to outstanding debt and operating leases totaled $1,001 as of March 31, 2023, with $24 due within one year[104]. - Legal expenses to a related law firm amounted to $35 for the three months ended March 31, 2023, compared to $9 for the same period in 2022[107]. - The company has not entered into any transactions using derivative financial instruments, indicating minimal exposure to market risk[108]. - The company's unrestricted cash on hand was $5,382 as of March 31, 2023, serving as the primary source of liquidity[101].

Financial Performance - Total net revenues for the three months ended December 31, 2022, were $14,392 million, an increase of 38.2% compared to $10,411 million for the same period in 2021[79]. - Healthcare Services net revenues increased by $605 million (18.1%) for the three months ended December 31, 2022, and by $891 million (13.0%) for the six months ended December 31, 2022, compared to the prior year periods[80]. - Pharmacy segment net revenues increased by $3,376 million (47.7%) for the three months ended December 31, 2022, and by $3,602 million (25.5%) for the six months ended December 31, 2022[81]. - Operating profit for the three months ended December 31, 2022, was $2,040 million, compared to an operating loss of $1,072 million for the same period in 2021[86]. - Costs and expenses for the three months ended December 31, 2022, were $12,352 million, a 7.6% increase from $11,483 million in the same period in 2021[84]. - Earnings from continuing operations after income tax for the three months ended December 31, 2022, were $2,052 million, compared to a loss of $477 million for the same period in 2021[96]. - Net earnings for the three months ended December 31, 2022, were $1,951, or $0.28 per fully diluted share, compared to a net loss of $593, or $0.09 per fully diluted share, for the same period in 2021[101]. COVID-19 Impact - During the COVID-19 pandemic, the Healthcare business experienced material reductions in demand and net revenues, alongside increased costs for medical supplies and staffing[67]. - The COVID-19 pandemic has resulted in operational disruptions, including staffing shortages and increased costs, negatively impacting financial performance[68]. - The impact of COVID-19 on the Company's financial statements remains uncertain, depending on future government actions and pandemic developments[73]. - SunLink's ability to attract and retain qualified staff has been affected by the pandemic, impacting operational efficiency[57]. - The Company has faced challenges in resuming normal business strategies post-COVID-19, with uncertainties affecting growth initiatives[64]. Government Assistance - SunLink's Healthcare and Pharmacy segments received approximately $6,182 in Provider Relief Funds (PRF) from April 1, 2020, to December 31, 2022, with $5,713 recognized as other income[69]. - The Company received $3,234 in Paycheck Protection Plan (PPP) loans, all of which have been forgiven as of December 31, 2022[70]. - The Company applied for Employee Retention Credit (ERC) of $3,586 for the first and second quarters of 2021, which has been fully received[71]. - The company recognized $0 and $614 million in federal stimulus - Provider relief funds during the three months ended December 31, 2022 and 2021, respectively[88]. - The company received a total of $9,416 under the CARES Act programs, consisting of $6,182 in general and targeted PRF and $3,234 of PPP loans[105]. - The Company continues to monitor compliance with terms of PRF and PPP funding, which are subject to federal audits[72]. Future Outlook and Operations - SunLink plans to focus on improving operations and achieving profitability while pursuing selective acquisitions as capital allows[63]. - The company anticipates funding capital expenditures primarily from cash on hand, with no specific estimates for other capital expenditures needed in the next twelve months[108]. - The company expects to purchase approximately $1,000 of capitalizable DME by the Pharmacy segment during the next twelve months[108]. - The company's ability to raise capital in public or private markets on acceptable terms is currently uncertain[104]. - The company is currently unaware of trends or uncertainties likely to cause a material change in its cash expenditures beyond the next twelve months[108]. Tax and Legal Matters - The company had approximately $21,772 million of estimated net operating loss carry-forwards available for use in future years[95]. - The company recognized a valuation allowance of $7,759 million against deferred tax assets as of December 31, 2022[93]. - Legal expenses related to discontinued operations resulted in a loss of $183 for the three months ended December 31, 2022[98]. - The company expensed $130 and $66 for legal services to a related law firm in the three months ended December 31, 2022, and 2021, respectively[110]. Debt and Cash Position - Contractual obligations related to outstanding debt at December 31, 2022, included $30 of capital lease debt and $1,069 in operating leases[107]. - The company had unrestricted cash on hand of $5,156 as of December 31, 2022, and received approximately $1,737 from its ERC filing in early January 2023[102].