Atlanta, Georgia (February 5, 2002) - SunLink Health Systems, Inc. (AMEX: SSY) today announced net earnings of $781,000 or $0.15 per fully diluted share for the quarter ended December 31, 2001 compared to a net loss of $449,000 or $0.09 per fully diluted share for the quarter ended December 31, 2000. For the six months ended December 31, 2001, net earnings were $435,000 ($0.09 per fully diluted share) compared to a net loss of $1,034,000 ($0.21 per fully diluted share) for the six months ended December 31, 2000.
SunLink reported an operating profit from continuing operations for its second fiscal quarter ended December 31, 2001 of $708,000 (before net interest expense of $682,000), which includes a gain of $310,000 from the previously reported sale of a nursing home, compared to an operating loss from continuing operations for the quarter ended December 31, 2000 of $262,000. The Corporation's continuing operations only include results from the six community hospitals which were acquired on February 1, 2001.
The Corporation reported earnings from continuing operations for the quarter ended December 31, 2001 of $26,000 compared to a loss of $133,000 in the same quarter last year. The loss from continuing operations last year resulted from corporate overhead expenses of $262,000, offset somewhat by net interest income of $129,000.
Consolidated net revenues for the three and six months periods ended December 31, 2001 were $21,590,000 and $43,139,000 respectively, all from the U.S. community hospital segment. No revenues from continuing operations were reported for the comparable periods ended December 31, 2000 because the operations of the Corporation's two business segments during that period, U.K. housewares and child safety products, have been reported as discontinued operations.
In the quarter ended December 31, 2001, the Corporation reported under discontinued operations a loss of $3,010,000 on the disposal of Beldray Ltd., its wholly-owned U.K. housewares segment, and earnings of $839,000 from the previously reported sale of senior preferred stock of LTS Holdings, Inc, which was held by the Corporation's life sciences and engineering segment. The Corporation also reported an extraordinary gain of $2,926,000 in the current quarter as a result of forgiveness of debt of Beldray in connection with Beldray's court supervised arrangement. The loss on the disposal of the housewares segment resulted from the higher accounting basis created by the extraordinary gain on forgiveness of debt and foreign currency translation adjustments.
For the six months ended December 31, 2001, the Corporation reported an operating profit of $790,000 (before net interest expense of $1,356,000) compared to an operating loss of $566,000 for the same period last year, and a loss from continuing operations of $566,000, compared to a loss of $237,000 for the same period last year.
For the six months ended December 31, 2001, the loss from discontinued operations was $1,925,000 comprised of a loss on disposal of the housewares segment of $2,756,000 offset by $831,000 earnings of the life sciences and engineering segment. The Corporation previously announced it would dispose of the housewares segment and reported a charge to discontinued operations of $3,989,000 for the disposal in the quarter ended June 30, 2001.
SunLink Health Systems, Inc. has redirected its business strategy toward the acquisition and operation of community hospitals in the U.S. The Corporation's U.S. community hospital segment is comprised of six community hospitals and related businesses which are operated through its wholly-owned subsidiary, SunLink Healthcare Corp. The Corporation changed its name to SunLink Health Systems, Inc. from KRUG International Corp. in August 2001.
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 Corporation'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 Corporation's Annual Report on Form 10-K for the year ended March 31, 2001.
The Corporation will conduct a conference call on Wednesday, February 6, 2002 at 11:00 a.m. EST to discuss its quarterly results. To participate in the conference call, please call 1-877-888-3855. A replay of the call will be available shortly after the call and continue to be available for 30 days at 1-888-509-0081.
