SunLink(US:SSY)2023-02-14 16:34Financial 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].