# EDGAR Filing Document

**Accession Number:** 0000096793
**File Stem:** 0000950170-23-002922
**Filing Date:** 2023-2
**Character Count:** 28734
**Document Hash:** 89b6c5db1153e73aeaf42303234161a5
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000950170-23-002922.hdr.sgml**: 20230215

**ACCESSION NUMBER**: 0000950170-23-002922

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 14

**CONFORMED PERIOD OF REPORT**: 20230215

**ITEM INFORMATION**: Other Events

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230215

**DATE AS OF CHANGE**: 20230215

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** SUNLINK HEALTH SYSTEMS INC
- **CENTRAL INDEX KEY:** 0000096793
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-GENERAL MEDICAL & SURGICAL HOSPITALS, NEC [8062]
- **IRS NUMBER:** 310621189
- **STATE OF INCORPORATION:** OH
- **FISCAL YEAR END:** 0630

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-12607
- **FILM NUMBER:** 23636165

**BUSINESS ADDRESS:**
- **STREET 1:** 900 CIRCLE 75 PARKWAY
- **STREET 2:** SUITE 690
- **CITY:** ATLANTA
- **STATE:** GA
- **ZIP:** 30339
- **BUSINESS PHONE:** 7709337000

**MAIL ADDRESS:**
- **STREET 1:** 900 CIRCLE 75 PARKWAY
- **STREET 2:** SUITE 690
- **CITY:** ATLANTA
- **STATE:** GA
- **ZIP:** 30339

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** KRUG INTERNATIONAL CORP
- **DATE OF NAME CHANGE:** 19920703

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** TECHNOLOGY INC
- **DATE OF NAME CHANGE:** 19860803

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** COMANCO INDUSTRIES INC
- **DATE OF NAME CHANGE:** 19710719

?xml version="1.0" encoding="ASCII"? 8-K

**UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549**

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**FORM** 8-K

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**CURRENT REPORT**

**Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**

**Date of Report (Date of earliest event reported):** February 15, 2023<br>

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SunLink Health Systems Inc.

**(Exact name of Registrant as Specified in Its Charter)**

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---

| | | |
|:---|:---|:---|
| Ohio | 001-12607 | 31-0621189 |
| **(State or Other Jurisdiction<br>of Incorporation)** | **(Commission File Number)** | **(IRS Employer<br>Identification No.)** |
| 900 Circle 75 Parkway<br>Suite 690 |  |  |
| Atlanta**,** Georgia |  | 30339 |
| **(Address of Principal Executive Offices)** |  | **(Zip Code)** |

---

**Registrant's Telephone Number, Including Area Code:** 770 933-7000<br>

**(Former Name or Former Address, if Changed Since Last Report)**

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

**Securities registered pursuant to Section 12(b) of the Act:**

---

| | | |
|:---|:---|:---|
| **<br>Title of each class** | **Trading<br>Symbol(s)** | **<br>Name of each exchange on which registered** |
| Common Shares without par value Preferred Share Purchase Rights | SYY | NYSE American LLC |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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**Item 8.01 Other Events.**

On February 15, 2023, the Company issued a press release announcing its fiscal 2023 second quarter results, a copy of which is attached as Exhibit 99.1 hereto and is incorporated by reference.

**Item 9.01 Financial Statements and Exhibits.**

<u>Exhibits</u> The following exhibit is filed with this report:

Exhibits 99.1 [<u>SunLink Health Systems, Inc. announces fiscal 2023 second quarter results.</u>](ssy-ex99_1.htm)

Exhibit 104 Cover Page Interactive Data File (embedded within the online XBRL document)

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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | | | |
|:---|:---|:---|:---|
|  |  |  | SUNLINK HEALTH SYSTEMS, INC.  |
| Date: | February 15, 2023 | By:  | /s/ Mark J. Stockslager |
|  |  |  | Name: Mark J. Stockslager<br>Title: Chief Financial Officer<br>|

---

------

## Ex-99

**<u>Exhibit 99.1</u>** 

**NEWS RELEASE**

**Contact:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Robert M. Thornton, Jr.**

 **Chief Executive Officer**

 **(770) 933-7004**

**SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES FISCAL 2023** 

**SECOND QUARTER RESULTS** 

**ATLANTA,** Georgia (February 15, 2023) – SunLink Health Systems, Inc. (NYSE American: SSY) today announced earnings from continuing operations of $2,052,000 ($0.29 per fully diluted share) for its second fiscal quarter ended December 31, 2022 compared to a loss from continuing operations of $477,000 (or a loss of $0.07 per fully diluted share) for the second fiscal quarter ended December 31, 2021. Net earnings for the quarter ended December 31, 2022 were $1,951,000 ($0.28 per fully diluted share) compared to a net loss of $593,000 (or a loss of $0.09 per fully diluted share) for the quarter ended December 31, 2021.

The fiscal quarter ended December 31, 2022, included recognition of net revenues of $2,615,000 from the reversal of reserves for certain sales taxes previously accrued by the Pharmacy Segment. The company determined during the quarter that, based upon discussions with and correspondence from taxing authorities and consultation with external legal counsel, it was more likely than not that such accrued sales taxes will not be payable.

The fiscal quarter ended December 31, 2021 included Provider Relief Funds ("PRF") of $614,000 (pre-tax).

Consolidated net revenues for the quarters ended December 31, 2022 and 2021 were $14,392,000 and $10,411,000, respectively, an increase of 38.2% in the current year's quarter compared to the comparable quarter of the prior fiscal year. Healthcare Services Segment net revenues increased 18.1% from the comparable fiscal quarter of the prior year due to increased hospital admissions and increased nursing home admissions this current quarter and Pharmacy Segment net revenues increased 47.7% from the comparable fiscal quarter of the prior fiscal year due to the recognition of income from the reversal of reserves for certain sales taxes previously accrued and increased retail and institutional pharmacy and Durable Medical Equipment ("DME") sales in the fiscal quarter ended December 31, 2022.

SunLink reported operating profit for the quarter ended December 31, 2022 of $2,040,000 compared to an operating loss for the quarter ended December 31, 2021 of $1,072,000. The substantial increase in operating profit from last year's comparable quarter was due to the previously mentioned recognition of income from reversal of the reserves for certain sales taxes previously accrued of $2,615,000. Excluding this adjustment, the resulting operating loss in the current year's quarter would have been less than last year due to higher net revenues and slightly lower wages and benefits expense.

------

Loss from discontinued operations was $101,000 (or a loss of $0.01 per fully diluted share) for the quarter ended December 31, 2022 compared to a loss from discontinued operations of $116,000 (or $0.02 per fully diluted share) for the quarter ended December 31, 2021.

Earnings from continuing operations for the six months ended December 31, 2022 were $508,000 ($0.07 per fully diluted share) compared to earnings from continuing operations for the six months ended December 31, 2021 of $1,529,000 ($0.22 per fully diluted share). Net earnings for the six months ended December 31, 2022 were $393,000 ($0.06 per fully diluted share) compared to net earnings of $1,346,000 ($0.19 per fully diluted share) for the six months ended December 31, 2021.

The six months ended December 31, 2022 included recognition of income from reversal of certain sales taxes previously accrued by its Pharmacy Segment which resulted in a $2,615,000 increase to net revenues, as well as PRF of $61,000 (pre-tax). The six months ended December 31, 2021 included forgiveness of Paycheck Protection Plan ("PPP") loans of $3,010,000 (pre-tax) and PRF of $614,000 (pre-tax).

Consolidated net revenues for the six months ended December 31, 2022 and 2021 were $25,429,000 and $20,936,000, respectively, an increase of 21.5% in the current year's quarter compared to the comparable quarter of the prior fiscal year. Healthcare Services Segment net revenues increased 13.0% from the prior year due to increased hospital admissions, clinic visits and increased nursing home admissions this year, and the Pharmacy Segment net revenues increased 25.5% from the prior year due to the recognition of income from reversal of reserves for certain sales taxes previously accrued and increased retail and institutional pharmacy sales this year.

SunLink reported operating profit for the six months ended December 31, 2022 of $427,000 compared to an operating loss for the six months ended December 31, 2021 of $2,065,000. The operating profit from this year was due to the previously mentioned recognition of income from the reversal of reserves for certain sales taxes previously accrued of $2,615,000 in this year's second fiscal quarter.

Loss from discontinued operations was $115,000 (or a loss of $0.02 per fully diluted share) for the six months ended December 31, 2022 compared to a loss from discontinued operations of $183,000 (or $0.03 per fully diluted share) for the six months ended December 31, 2021.

The company's cash and cash equivalents on December 31, 2022 was $5,156,000, a decline of $1,638,000 from June 30, 2022, due to the six month's operating loss and capital expenditures by both the Healthcare Service and Pharmacy Segments.

**<u>COVID-19 Pandemic</u>**

The Company continued to experience adverse effects of the COVID-19 pandemic and its aftermath of the COVID-19 pandemic for the last quarter and believes it will continue to affect its assets and operations in the foreseeable future. Our ability to make estimates of any continuing effect of the COVID-19 pandemic and its aftermath on revenues, expenses or changes in accounting judgments that have had or are reasonably likely to have a material effect on our financial statements is currently limited. The nature and extent of the continuing effect of the

------

COVID-19 pandemic and its aftermath on our balance sheet and results of operations will depend on the severity and length of the evolving strains of COVID-19; any further government actions and/or regulatory changes to address the continuing effect of the pandemic; especially those that affect our hospital, extended care, rehabilitation center, nursing home, clinics, and our pharmacy operations; existing and potential government assistance that may be provided; and the requirements of PRF, including our ability to retain such PRF received.

SunLink Health Systems, Inc. is the parent company of subsidiaries that own and operate healthcare properties and businesses in the Southeast. Each of the Company's businesses is operated locally with a strategy of linking patients' needs with healthcare professionals. For additional information on SunLink Health Systems, Inc., please visit the Company's website.

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, statements regarding the company's business strategy. These forward-looking statements are subject to certain risks, uncertainties, and other factors, which could cause actual results, performance, and achievements to differ materially from those anticipated. Certain of those risks, uncertainties and other factors are disclosed in more detail in the company's Annual Report on Form 10-K for the year ended June 30, 2022 and other filings with the Securities and Exchange Commission which can be located at www.sec.gov.

- more –

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SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES

FISCAL 2023 SECOND QUARTER RESULTS

Amounts in 000's, except per share

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Six Months Ended December 31,** | **Six Months Ended December 31,** | **Six Months Ended December 31,** | **Six Months Ended December 31,** |
|  | **2022** | **2022** | **2021** | **2021** | **2022** | **2022** | **2021** | **2021** |
|  |  | **% of Net** |  | **% of Net** |  | **% of Net** |  | **% of Net** |
|  | **Amount** | **Revenues** | **Amount** | **<u>Revenues</u>** | **Amount** | **Revenues** | **Amount** | **<u>Revenues</u>** |
| Net Revenues | $14392 | 100.0% | $10411 | 100.0% | $25429 | 100.0% | $20936 | 100.0% |
| Costs and Expenses: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Cost of goods sold | 4518 | 31.4% | 4016 | 38.6% | 8887 | 34.9% | 8089 | 38.6% |
| &nbsp;&nbsp;Salaries, wages and benefits | 4667 | 32.4% | 4789 | 46.0% | 9997 | 39.3% | 9487 | 45.3% |
| &nbsp;&nbsp;Supplies | 401 | 2.8% | 308 | 3.0% | 738 | 2.9% | 608 | 2.9% |
| &nbsp;&nbsp;Purchased services | 999 | 6.9% | 783 | 7.5% | 2034 | 8.0% | 1645 | 7.9% |
| &nbsp;&nbsp;Other operating expenses | 1254 | 8.7% | 1101 | 10.6% | 2347 | 9.2% | 2183 | 10.4% |
| &nbsp;&nbsp;Rents and leases | 126 | 0.9% | 120 | 1.2% | 244 | 1.0% | 290 | 1.4% |
| &nbsp;&nbsp;Depreciation and amortization | 387 | 2.7% | 366 | 3.5% | 755 | 3.0% | 699 | 3.3% |
| Operating profit (loss) | 2040 | 14.2% | (1072) | -10.3% | 427 | 1.7% | (2065) | -9.9% |
| &nbsp;&nbsp;Interest Income (expense) - net | 9 | 0.1% | (3) | 0.0% | 5 | 0.0% | (17) | -0.1% |
| &nbsp;&nbsp;Forgiveness of PPP loans and accrued interest | 0 | 0.0% | 0 | 0.0% | 0 | 0.0% | 3010 | 14.4% |
| &nbsp;&nbsp;Federal pandemic stimulus- provider relief funds | 0 | 0.0% | 614 | 5.9% | 61 | 0.2% | 614 | 2.9% |
| &nbsp;&nbsp;Gain on sale of assets | 2 | 0.0% | 7 | 0.1% | 14 | 0.1% | 12 | 0.1% |
| Earnings (Loss) from Continuing Operations before |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Income Taxes | 2051 | 14.3% | (454) | -4.4% | 507 | 2.0% | 1554 | 7.4% |
| Income Tax (benefit) expense | (1) | 0.0% | 23 | 0.2% | (1) | 0.0% | 25 | 0.1% |
| Earnings (Loss) from Continuing Operations | 2052 | 14.3% | (477) | -4.6% | 508 | 2.0% | 1529 | 7.3% |
| Loss from Discontinued Operations, net of tax | (101) | -0.7% | (116) | -1.1% | (115) | -0.5% | (183) | -0.9% |
| &nbsp;&nbsp;Net Earnings (Loss) | $1951 | 13.6% | $(593) | -5.7% | $393 | 1.5% | $1346 | 6.4% |
| Earnings (Loss) Per Share from Continuing Operations: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic | $0.29 |  | $(0.07) |  | $0.07 |  | $0.22 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted | $0.29 |  | $(0.07) |  | $0.07 |  | $0.22 |  |
| Earnings (Loss) Per Share from Discontinued Operations: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic | $(0.01) |  | $(0.02) |  | $(0.02) |  | $(0.03) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted | $(0.01) |  | $(0.02) |  | $(0.02) |  | $(0.03) |  |
| Net Earnings (Loss) Per Share: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic | $0.28 |  | $(0.09) |  | $0.06 |  | $0.19 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted | $0.28 |  | $(0.09) |  | $0.06 |  | $0.19 |  |
| Weighted Average Common Shares Outstanding: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic | 7031 |  | 6947 |  | 7007 |  | 6935 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted | 7033 |  | 6947 |  | 7010 |  | 7099 |  |

---

------

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;**SUMMARY BALANCE SHEETS** | **December 31,** | **June 30,** |
|  | **2022** | **2022** |
| &nbsp;&nbsp;&nbsp;&nbsp;ASSETS |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and Cash Equivalents | $5156 | $6794 |
| &nbsp;&nbsp;&nbsp;&nbsp;Receivable - net | 4475 | 4624 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other Current Assets | 5393 | 5397 |
| &nbsp;&nbsp;&nbsp;&nbsp;Property Plant and Equipment, net | 8427 | 8217 |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term Assets | 2718 | 2911 |
|  | $26169 | $27943 |
| &nbsp;&nbsp;&nbsp;&nbsp;LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Current Liabilities | $5633 | $7691 |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term Debt and Other Noncurrent Liabilities | 975 | 1132 |
| &nbsp;&nbsp;&nbsp;&nbsp;Shareholders' Equity | 19561 | 19120 |
|  | $26169 | $27943 |

---

------

### Attached PDF Documents

**Attachment 1:** `ssy-ex99_1.pdf`

![img-0.jpeg](img-0.jpeg)

**NEWS RELEASE**  
**Contact:**  
**Robert M. Thornton, Jr.**  
**Chief Executive Officer**  
**(770) 933-7004**

## **SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES FISCAL 2023 SECOND QUARTER RESULTS**

**ATLANTA, Georgia** (February 15, 2023) - SunLink Health Systems, Inc. (NYSE American: SSY) today announced earnings from continuing operations of $2,052,000 ($0.29 per fully diluted share) for its second fiscal quarter ended December 31, 2022 compared to a loss from continuing operations of $477,000 (or a loss of $0.07 per fully diluted share) for the second fiscal quarter ended December 31, 2021. Net earnings for the quarter ended December 31, 2022 were $1,951,000 ($0.28 per fully diluted share) compared to a net loss of $593,000 (or a loss of $0.09 per fully diluted share) for the quarter ended December 31, 2021.

The fiscal quarter ended December 31, 2022, included recognition of net revenues of $2,615,000 from the reversal of reserves for certain sales taxes previously accrued by the Pharmacy Segment. The company determined during the quarter that, based upon discussions with and correspondence from taxing authorities and consultation with external legal counsel, it was more likely than not that such accrued sales taxes will not be payable.

The fiscal quarter ended December 31, 2021 included Provider Relief Funds (“PRF”) of $614,000 (pre-tax).

Consolidated net revenues for the quarters ended December 31, 2022 and 2021 were $14,392,000 and $10,411,000, respectively, an increase of 38.2% in the current year’s quarter compared to the comparable quarter of the prior fiscal year. Healthcare Services Segment net revenues increased 18.1% from the comparable fiscal quarter of the prior year due to increased hospital admissions and increased nursing home admissions this current quarter and Pharmacy Segment net revenues increased 47.7% from the comparable fiscal quarter of the prior fiscal year due to the recognition of income from the reversal of reserves for certain sales taxes previously accrued and increased retail and institutional pharmacy and Durable Medical Equipment (“DME”) sales in the fiscal quarter ended December 31, 2022.

SunLink reported operating profit for the quarter ended December 31, 2022 of $2,040,000 compared to an operating loss for the quarter ended December 31, 2021 of $1,072,000. The substantial increase in operating profit from last year’s comparable quarter was due to the previously mentioned recognition of income from reversal of the reserves for certain sales taxes previously accrued of $2,615,000. Excluding this adjustment, the resulting operating loss in the current year’s quarter would have been less than last year due to higher net revenues and slightly lower wages and benefits expense.

Loss from discontinued operations was $101,000 (or a loss of $0.01 per fully diluted share) for the quarter ended December 31, 2022 compared to a loss from discontinued operations of $116,000 (or $0.02 per fully diluted share) for the quarter ended December 31, 2021.

Earnings from continuing operations for the six months ended December 31, 2022 were $508,000 ($0.07 per fully diluted share) compared to earnings from continuing operations for the six months ended December 31, 2021 of $1,529,000 ($0.22 per fully diluted share). Net earnings for the six months ended December 31, 2022 were $393,000 ($0.06 per fully diluted share) compared to net earnings of $1,346,000 ($0.19 per fully diluted share) for the six months ended December 31, 2021.

The six months ended December 31, 2022 included recognition of income from reversal of certain sales taxes previously accrued by its Pharmacy Segment which resulted in a $2,615,000 increase to net revenues, as well as PRF of $61,000 (pre-tax). The six months ended December 31, 2021 included forgiveness of Paycheck Protection Plan (“PPP”) loans of $3,010,000 (pre-tax) and PRF of $614,000 (pre-tax).

Consolidated net revenues for the six months ended December 31, 2022 and 2021 were $25,429,000 and $20,936,000, respectively, an increase of 21.5% in the current year’s quarter compared to the comparable quarter of the prior fiscal year. Healthcare Services Segment net revenues increased 13.0% from the prior year due to increased hospital admissions, clinic visits and increased nursing home admissions this year, and the Pharmacy Segment net revenues increased 25.5% from the prior year due to the recognition of income from reversal of reserves for certain sales taxes previously accrued and increased retail and institutional pharmacy sales this year.

SunLink reported operating profit for the six months ended December 31, 2022 of $427,000 compared to an operating loss for the six months ended December 31, 2021 of $2,065,000. The operating profit from this year was due to the previously mentioned recognition of income from the reversal of reserves for certain sales taxes previously accrued of $2,615,000 in this year’s second fiscal quarter.

Loss from discontinued operations was $115,000 (or a loss of $0.02 per fully diluted share) for the six months ended December 31, 2022 compared to a loss from discontinued operations of $183,000 (or $0.03 per fully diluted share) for the six months ended December 31, 2021.

The company’s cash and cash equivalents on December 31, 2022 was $5,156,000, a decline of $1,638,000 from June 30, 2022, due to the six month’s operating loss and capital expenditures by both the Healthcare Service and Pharmacy Segments.

## COVID-19 Pandemic

The Company continued to experience adverse effects of the COVID-19 pandemic and its aftermath of the COVID-19 pandemic for the last quarter and believes it will continue to affect its assets and operations in the foreseeable future. Our ability to make estimates of any continuing effect of the COVID-19 pandemic and its aftermath on revenues, expenses or changes in accounting judgments that have had or are reasonably likely to have a material effect on our

financial statements is currently limited. The nature and extent of the continuing effect of the COVID-19 pandemic and its aftermath on our balance sheet and results of operations will depend on the severity and length of the evolving strains of COVID-19; any further government actions and/or regulatory changes to address the continuing effect of the pandemic; especially those that affect our hospital, extended care, rehabilitation center, nursing home, clinics, and our pharmacy operations; existing and potential government assistance that may be provided; and the requirements of PRF, including our ability to retain such PRF received.

SunLink Health Systems, Inc. is the parent company of subsidiaries that own and operate healthcare properties and businesses in the Southeast. Each of the Company's businesses is operated locally with a strategy of linking patients' needs with healthcare professionals. For additional information on SunLink Health Systems, Inc., please visit the Company's website.

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, statements regarding the company's business strategy. These forward-looking statements are subject to certain risks, uncertainties, and other factors, which could cause actual results, performance, and achievements to differ materially from those anticipated. Certain of those risks, uncertainties and other factors are disclosed in more detail in the company's Annual Report on Form 10-K for the year ended June 30, 2022 and other filings with the Securities and Exchange Commission which can be located at www.sec.gov.

- more -

SUNLINK HEALTH SYSTEMS, INC. ANNOUNCES

FISCAL 2023 SECOND QUARTER RESULTS

Amounts in 000's, except per share

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

|  | Three Months Ended December 31, |  |  |  | Six Months Ended December 31, |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | 2022 |  | 2021 |  | 2022 |  | 2021 |  |
|  | Amount | % of Net Revenues | Amount | % of Net Revenues | Amount | % of Net Revenues | Amount | % of Net Revenues |
| Net Revenues | $14,392 | 100.0% | $10,411 | 100.0% | $25,429 | 100.0% | $20,936 | 100.0% |
| Costs and Expenses: |  |  |  |  |  |  |  |  |
| Cost of goods sold | 4,518 | 31.4% | 4,016 | 38.6% | 8,887 | 34.9% | 8,089 | 38.6% |
| Salaries, wages and benefits | 4,667 | 32.4% | 4,789 | 46.0% | 9,997 | 39.3% | 9,487 | 45.3% |
| Supplies | 401 | 2.8% | 308 | 3.0% | 738 | 2.9% | 608 | 2.9% |
| Purchased services | 999 | 6.9% | 783 | 7.5% | 2,034 | 8.0% | 1,645 | 7.9% |
| Other operating expenses | 1,254 | 8.7% | 1,101 | 10.6% | 2,347 | 9.2% | 2,183 | 10.4% |
| Rents and leases | 126 | 0.9% | 120 | 1.2% | 244 | 1.0% | 290 | 1.4% |
| Depreciation and amortization | 387 | 2.7% | 366 | 3.5% | 755 | 3.0% | 699 | 3.3% |
| Operating profit (loss) | 2,040 | 14.2% | (1,072) | -10.3% | 427 | 1.7% | (2,065) | -9.9% |
| Interest Income (expense) - net | 9 | 0.1% | (3) | 0.0% | 5 | 0.0% | (17) | -0.1% |
| Forgiveness of PPP loans and accrued interest | 0 | 0.0% | 0 | 0.0% | 0 | 0.0% | 3,010 | 14.4% |
| Federal pandemic stimulus- provider relief funds | 0 | 0.0% | 614 | 5.9% | 61 | 0.2% | 614 | 2.9% |
| Gain on sale of assets | 2 | 0.0% | 7 | 0.1% | 14 | 0.1% | 12 | 0.1% |
| Earnings (Loss) from Continuing Operations before Income Taxes | 2,051 | 14.3% | (454) | -4.4% | 507 | 2.0% | 1,554 | 7.4% |
| Income Tax (benefit) expense | (1) | 0.0% | 23 | 0.2% | (1) | 0.0% | 25 | 0.1% |
| Earnings (Loss) from Continuing Operations | 2,052 | 14.3% | (477) | -4.6% | 508 | 2.0% | 1,529 | 7.3% |
| Loss from Discontinued Operations, net of tax | (101) | -0.7% | (116) | -1.1% | (115) | -0.5% | (183) | -0.9% |
| Net Earnings (Loss) | $1,951 | 13.6% | $(593) | -5.7% | $393 | 1.5% | $1,346 | 6.4% |
| Earnings (Loss) Per Share from Continuing Operations: |  |  |  |  |  |  |  |  |
| Basic | $0.29 |  | $(0.07) |  | $0.07 |  | $0.22 |  |
| Diluted | $0.29 |  | $(0.07) |  | $0.07 |  | $0.22 |  |
| Earnings (Loss) Per Share from Discontinued Operations: |  |  |  |  |  |  |  |  |
| Basic | $(0.01) |  | $(0.02) |  | $(0.02) |  | $(0.03) |  |
| Diluted | $(0.01) |  | $(0.02) |  | $(0.02) |  | $(0.03) |  |
| Net Earnings (Loss) Per Share: |  |  |  |  |  |  |  |  |
| Basic | $0.28 |  | $(0.09) |  | $0.06 |  | $0.19 |  |
| Diluted | $0.28 |  | $(0.09) |  | $0.06 |  | $0.19 |  |
| Weighted Average Common Shares Outstanding: |  |  |  |  |  |  |  |  |
| Basic | 7,031 |  | 6,947 |  | 7,007 |  | 6,935 |  |
| Diluted | 7,033 |  | 6,947 |  | 7,010 |  | 7,090 |  |
| SUMMARY BALANCE SHEETS | December 31, 2022 | June 30, 2022 |  |  |  |  |  |  |
| ASSETS |  |  |  |  |  |  |  |  |
| Cash and Cash Equivalents | $5,156 | $6,794 |  |  |  |  |  |  |
| Receivable - net | 4,475 | 4,624 |  |  |  |  |  |  |
| Other Current Assets | 5,393 | 5,397 |  |  |  |  |  |  |
| Property Plant and Equipment, net | 8,427 | 8,217 |  |  |  |  |  |  |
| Long-term Assets | 2,718 | 2,911 |  |  |  |  |  |  |
|  | $26,169 | $27,943 |  |  |  |  |  |  |
| LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |  |  |  |  |
| Current Liabilities | $5,633 | $7,691 |  |  |  |  |  |  |
| Long-term Debt and Other Noncurrent Liabilities | 975 | 1,132 |  |  |  |  |  |  |
| Shareholders' Equity | 19,561 | 19,120 |  |  |  |  |  |  |
|  | $26,169 | $27,943 |  |  |  |  |  |  |