SunLink(US:SSY)2023-11-17 21:09Financial 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].