Regional Health Properties, Inc. Presents Growth Strategy and Integration Update Following SunLink Merger

Executive Summary

Regional Health Properties, Inc. (“RHEP”) has delivered a comprehensive update to investors at the Sidoti Virtual Small Cap Conference, outlining its strategic vision, integration progress following the SunLink Health Systems, Inc. merger, and its roadmap for value creation. This report contains several key developments that may prove significant for current and prospective shareholders.

Key Highlights from the Report

• Vertically Integrated Healthcare Platform: RHEP now operates an asset-backed platform spanning real estate, healthcare services, and pharmacy, positioning itself for durable growth and improved capital efficiency.
• Completion and Integration of SunLink Health Systems Merger: The recent merger with SunLink has added a long-standing pharmacy segment and other healthcare operations, which RHEP is actively integrating into its platform.
• Owned Real Estate Portfolio: The company owns 11 healthcare real estate assets (~1,050 licensed beds) across five states, providing a stable valuation floor and strategic control.
• Geographic Concentration: RHEP’s assets are clustered in the Southeastern U.S., supporting operating efficiencies and scalable growth.
• Favorable Industry Dynamics: The platform stands to benefit from demographic tailwinds (aging population), constrained new supply of skilled nursing facilities, and supportive reimbursement trends.
• Disciplined Capital Structure: RHEP manages a predominantly fixed-rate, non-recourse debt structure with long maturities, enhancing downside protection and financial flexibility.
• Repurchase of Series B Preferred Shares: The company is actively repurchasing Series B preferred shares at a discount to liquidation preference, which creates value for common equity holders.

Strategic and Financial Details

Integration of SunLink and Pharmacy Platform Expansion

The merger with SunLink Health Systems has provided RHEP with an established pharmacy platform (operating for 50+ years), now serving institutional, retail, and durable medical equipment (DME) markets. This segment alone contributes approximately \$30 million in annual revenue, servicing around 1,400 beds as of year-end 2025. The integration of pharmacy services is expected to yield operational synergies, market intelligence, and new growth avenues.

Vertically Integrated Business Model

RHEP operates three synergistic segments:

• Real Estate: ~355 beds, \$2.8M annualized revenue, clustered facilities in Southwest Ohio.
• Healthcare Services: ~771 beds, \$50M annualized revenue, diversified across four states.
• Pharmacy Services: ~1,400 beds, \$30M annualized revenue, multi-line pharmacy operation.

This integration allows RHEP to capture multiple revenue streams, improve clinical outcomes, and create operating leverage through geographic clustering.

Capital Structure and Debt Profile

RHEP maintains a conservative capital structure:

• Debt: \$43.2M first lien debt, predominantly long-term and fixed-rate (weighted average interest rate: 5.06%; ~85% fixed-rate; ~70% non-recourse).
• Preferred Equity: \$43.8M total liquidation preference across Series A, B, and D preferred shares. Series B carries a 12.5% rate and is being repurchased at a discount.
• Common Equity: \$5.4M market cap (3.9M shares at \$1.40/share).
• Capital Ratios: Debt/Total Capital: 46.6%; Debt to Gross Assets: 40%; Debt to EBITDA: 8x.

The significant repurchase of Series B preferred shares below liquidation preference is a value-accretive move for common shareholders.

Industry Tailwinds

RHEP is positioned to benefit from:

• Projected doubling of the U.S. population aged 85+ by 2035, nearly tripling by 2060.
• Constrained new development in skilled nursing and senior housing due to high financing costs and labor shortages.
• Rising reimbursement rates for skilled nursing, with value-based care trends favoring scaled, integrated operators.

Other Important Information for Shareholders

• Liquidity and Refinancing: The company continues to seek refinancing opportunities and aims to maintain balance sheet flexibility through asset sales, borrowings, and, if needed, the sale of securities.
• Operational Improvements: RHEP is targeting margin expansion through operator transitions, capital structure optimization, and leveraging integrated services.
• Risks: The company highlights risks including reimbursement changes, labor shortages, regulatory pressures, and tenant performance. Shareholders should monitor these closely as they could impact financial results and share value.

Senior Management Team

RHEP is led by CEO Brent Morrison, CFA, who has been with the company since 2019 and has a background in capital management and investment analysis. The CFO, Mark J. Stockslager, joined from SunLink and brings deep experience in healthcare finance and public reporting. The board includes former executives from senior living, healthcare, and real estate sectors, providing institutional knowledge and stability.

Share Information

• Common Stock Symbol: RHEP
• Share Price: \$1.40
• Common Shares Outstanding: 3,900,000
• Preferred Series A (RHEPA): \$0.26, 599,200 shares
• Preferred Series B (RHEPB): \$6.18, 1,000,000 shares
• Preferred Series D (RHEPZ): \$2.00, 1,410,000 shares

Conclusion: Potential Share Price Catalysts

Regional Health Properties, Inc. is at an inflection point, with its vertically integrated, asset-backed platform and recent strategic merger positioning it for future growth and value creation. The company’s disciplined capital management, ongoing repurchase of preferred shares, and exposure to strong industry tailwinds may drive improved market recognition and potentially support share price appreciation.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should review all filings and disclosures of Regional Health Properties, Inc. and consult with their financial advisors before making investment decisions. Past performance is not indicative of future results. Forward-looking statements are subject to risks and uncertainties.

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