SunLink Health Systems, Inc. Announces Fiscal 2007 and Fourth Quarter Results

Business Wire,  Sept 20, 2007  

Tags: earnings

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ATLANTA -- SunLink Health Systems, Inc. (AMEX: SSY) today announced earnings from continuing operations for its fourth fiscal quarter ended June 30, 2007 of $960,000, or $0.12 per fully diluted share, compared to earnings from continuing operations of $1,171,000, or $0.15 per fully diluted share, for the quarter ended June 30, 2006. For the fiscal year ended June 30, 2007, SunLink reported earnings from continuing operations of $1,577,000, or $0.20 per fully diluted share, compared to earnings from continuing operations of $4,181,000, or $0.53 per fully diluted share, for the fiscal year ended June 30, 2006.

SunLink reported net earnings of $881,000, or $0.11 per fully diluted share for the quarter ended June 30, 2007, compared to net earnings of $1,272,000, or $0.16 per fully diluted share for the comparable quarter a year ago. The effective income tax rate of approximately 45% for the quarter ended June 30, 2007 was substantially higher than the approximately 23% effective rate for the same period last year due to the recognition in the quarter ended June 30, 2006 of settlement of prior years' tax returns in that year and adjustments to the estimated liabilities thereon which did not reoccur in the current year's quarter. For the fiscal year ended June 30, 2007, SunLink reported net earnings of $1,396,000, or $0.18 per fully diluted share compared to net earnings of $3,909,000, or $0.50 per fully diluted share for the fiscal year ended June 30, 2006.

The company's operating profit from continuing operations for the quarter ended June 30, 2007 was $2,155,000 compared to an operating profit for the quarter ended June 30, 2006 of $1,783,000. Increased operating profit from continuing operations for the quarter ended June 30, 2007 was due in part to $567,000 of positive prior year third-party payor settlements in the current year's quarter compared to $44,000 of positive prior year third-party payor settlements for the comparable quarter a year ago. SunLink had operating profit of $4,414,000 for the fiscal year ended June 30, 2007 compared to $7,627,000 for the fiscal year ended June 30, 2006. Operating profit for the fiscal years ended June 30, 2007 and 2006 was positively impacted by $266,000 and $312,000 prior year third-party payor settlements, respectively.

Consolidated net revenues from continuing operations for the quarters ended June 30, 2007 and 2006 were $37,596,000 and $34,805,000, respectively, an increase of 8.0% in the current year. The increased net revenues in the fourth fiscal quarter of 2007 resulted primarily from an increase of $315,000, or 16%, in revenues from state indigent care programs, a 12.4% increase in equivalent admissions and a 4.0% increase in admissions. SunLink had $2,262,000 of revenues from state indigent care programs in the quarter ended June 30, 2007 compared to $1,947,000 for the fourth quarter last year. Consolidated net revenues from continuing operations for the fiscal year ended June 30, 2007 increased by 6.0% to $143,645,000 compared with the prior fiscal year's consolidated net revenues of $135,576,000. The increased net revenues resulted from a 6.9% increase in equivalent admissions.

Commenting on the quarter and fiscal 2007 results, Robert M. Thornton, Jr., chairman and chief executive officer, said, "We are pleased with the volume increases we reported in the fourth quarter. This reflects the benefit of our physician recruiting efforts and investments in our hospital facilities over the last year. While we continued to experience increased bad debts for the fiscal year, the provision for bad debts as a percentage of revenues decreased in the fourth fiscal quarter of 2007 from the third fiscal quarter due to our continued focus on mitigating the consistent rise in bad debts we, like the rest of our industry, have been facing."

Mr. Thornton continued, "Over the past year, we added seven new physicians. Additionally, we spent approximately $9,000,000 for capital improvements during fiscal 2007. We have in process a major renovation project at our Dahlonega, GA facility and have added free standing diagnostic centers in Dawsonville and Dahlonega, GA. Upgraded diagnostic equipment was added at five of our facilities during the year. We believe our future success will be enhanced by the additional physicians, services and facilities we are investing in now. Growth through internal investment activities as well as through strategic acquisitions should assist us going forward in fiscal 2008."

SunLink Health Systems, Inc. currently operates seven community hospitals and related businesses in the Southeast and Midwest. Each SunLink facility is the only hospital in its community. SunLink's operating strategy is to link patients' needs with dedicated physicians and health professionals to deliver quality, efficient medical care in each community it serves. For additional information on SunLink Health Systems, Inc., please visit the company's website at www.sunlinkhealth.com.