SunLink(US:SSY)2024-02-13 21:54Financial 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].