10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                   

Commission File Number 001-33135

Regional Health Properties, Inc.

(Exact name of registrant as specified in its charter)

Georgia	81-5166048
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification Number)

454 Satellite Boulevard NW, Suite 100, Suwanee, GA 30024

(Address of principal executive offices)

(678) 869-5116

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	RHE	NYSE American
10.875% Series A Cumulative Redeemable Preferred Stock, no par value	RHE-PA	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		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. Yes ☐    No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ☐  No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of July 31, 2021:  1,726,605 shares of common stock, no par value, were outstanding.

Regional Health Properties, Inc.

Form 10-Q

Table of Contents

		Page Number
Part I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020	3
	Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020	4
	Consolidated Statements of Stockholders' Equity for the three and six months ended June 30, 2021 and 2020	5
	Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020	6
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
Part II.	OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	43
Signatures		46

2

Part I.  Financial Information

Item 1. Financial Statements

REGIONAL HEALTH PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in 000’s)

	June 30, 2021			December 31, 2020
	(Unaudited)
ASSETS
Property and equipment, net	$	51,355			$	52,533
Cash		5,633				4,186
Restricted cash		2,966				3,306
Accounts receivable, net of allowance of $109 and $1,381		1,593				2,100
Prepaid expenses and other		990				328
Notes receivable		404				444
Intangible assets - bed licenses		2,471				2,471
Intangible assets - lease rights, net		146				158
Right-of-use operating lease assets		31,863				33,740
Goodwill		1,585				1,585
Lease deposits and other deposits		514				514
Straight-line rent receivable		7,643				6,660
Total assets	$	107,163			$	108,025
LIABILITIES AND EQUITY
Senior debt, net	$	46,636			$	47,275
Bonds, net		6,236				6,342
Other debt, net		1,291				822
Accounts payable		3,383				3,008
Accrued expenses		3,320				2,225
Operating lease obligation		34,040				35,884
Other liabilities		1,519				1,365
Total liabilities		96,425				96,921
Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock and additional paid-in capital, no par value; 55,000 shares authorized; 1,727 and 1,688 issued and outstanding at June 30, 2021 and December 31, 2020, respectively		62,157				62,041
Preferred stock, no par value; 5,000 shares authorized; 2,812 shares issued and outstanding, redemption amount $70,288 at June 30, 2021 and December 31, 2020		62,423				62,423
Accumulated deficit		(113,842	)			(113,360	)
Total stockholders’ equity		10,738				11,104
Total liabilities and stockholders’ equity	$	107,163			$	108,025

See accompanying notes to unaudited consolidated financial statements

3

REGIONAL HEALTH PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in 000’s, except per share data)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenues:
Patient care revenues	$	2,445		$	—		$	5,135		$	—
Rental revenues		3,763			4,293			7,844			8,590
Management fees		247			244			495			488
Other revenues		13			2			75			9
Total revenues		6,468			4,539			13,549			9,087
Expenses:
Patient care expense		2,254			—			4,457			—
Facility rent expense		1,639			1,639			3,279			3,279
Cost of management fees		150			174			315			325
Depreciation and amortization		652			769			1,302			1,545
General and administrative expense		945			714			1,981			1,591
Doubtful accounts expense (recovery)		37			(135	)		77			(137	)
Other operating expenses		243			297			475			521
Total expenses		5,920			3,458			11,886			7,124
Income from operations		548			1,081			1,663			1,963
Other expense (income) :
Interest expense, net		666			684			1,353			1,399
Other expense (income), net		323			(9	)		717			135
Total other expense (income), net		989			675			2,070			1,534
(Loss) income from continuing operations before income taxes		(441	)		406			(407	)		429
(Loss) income from continuing operations	$	(441	)	$	406		$	(407	)	$	429
(Loss) income from discontinued operations, net of tax		(62	)		6			(75	)		(31	)
Net (loss) income		(503	)		412			(482	)		398
Preferred stock dividends - undeclared		(2,249	)		(2,249	)		(4,498	)		(4,498	)
Net Loss attributable to Regional Health Properties, Inc. common stockholders	$	(2,752	)	$	(1,837	)	$	(4,980	)	$	(4,100	)
Net (loss) income per share of common stock attributable to Regional Health Properties, Inc.
Basic and diluted:
Continuing operations	$	(1.59	)	$	(1.09	)	$	(2.90	)	$	(2.41	)
Discontinued operations		(0.03	)		0.00			(0.04	)		(0.02	)
	$	(1.62	)	$	(1.09	)	$	(2.94	)	$	(2.43	)
Weighted average shares of common stock outstanding:
Basic and diluted		1,697			1,688			1,692			1,688

See accompanying notes to unaudited consolidated financial statements

4

REGIONAL HEALTH PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Amounts in 000’s)

(Unaudited)

For the Three and Six Months ended June 30, 2021	Shares of Common Stock			Shares of Preferred Stock		Common Stock and Additional Paid-in Capital			Preferred Stock		Accumulated Deficit			Total
Balances, December 31, 2020		1,688			2,812	$	62,041		$	62,423	$	(113,360	)	$	11,104
Net income		—			—		—			—		21			21
Balances, March 31, 2021		1,688			2,812	$	62,041		$	62,423	$	(113,339	)	$	11,125
Stock-based compensation		39			—		123			—		—			123
Exercise of restricted share awards net settlement option		(1	)		—		(7	)		—		—			(7	)
Treasury shares, no par value		1			—		—			—		—			—
Net loss		—			—		—			—		(503	)		(503	)
Balances, June 30, 2021		1,727			2,812	$	62,157		$	62,423	$	(113,842	)	$	10,738

For the Three and Six Months ended June 30, 2020	Shares of Common Stock		Shares of Preferred Stock		Common Stock and Additional Paid-in Capital		Preferred Stock		Accumulated Deficit			Total
Balances, December 31, 2019		1,688		2,812	$	61,992	$	62,423	$	(112,672	)	$	11,743
Stock-based compensation		—		—		12		—		—			12
Net loss		—		—		—		—		(14	)		(14	)
Balances, March 31, 2020		1,688		2,812	$	62,004	$	62,423	$	(112,686	)	$	11,741
Stock-based compensation		—		—		12		—		—			12
Net income		—		—		—		—		412			412
Balances, June 30, 2020		1,688		2,812	$	62,016	$	62,423	$	(112,274	)	$	12,165

See accompanying notes to unaudited consolidated financial statements

5

REGIONAL HEALTH PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in 000’s)

(Unaudited)

	Six Months Ended June 30,
	2021			2020
Cash flows from operating activities:
Net (Loss) income	$	(482	)	$	398
Loss from discontinued operations, net of tax		75			31
(Loss) income from continuing operations		(407	)		429
Adjustments to reconcile net (loss) income from continuing operations to net cash provided by operating activities:
Depreciation and amortization		1,302			1,545
Stock-based compensation expense		123			24
Rent expense in excess of cash paid		34			109
Rent revenue in excess of cash received		(1,229	)		(536	)
Amortization of deferred financing costs, debt discounts and premiums		55			64
Bad debt expense (recovery)		77			(137	)
Changes in operating assets and liabilities:
Accounts receivable		633			(1,078	)
Prepaid expenses and other assets		244			65
Accounts payable and accrued expenses		1,544			68
Other liabilities		155			267
Net cash provided by operating activities - continuing operations		2,531			820
Net cash used in operating activities - discontinued operations		(144	)		(904	)
Net cash provided by (used in) operating activities		2,387			(84	)
Cash flows from investing activities:
Purchase of property and equipment		(74	)		(157	)
Net cash used in investing activities - continuing operations		(74	)		(157	)
Net cash used in investing activities		(74	)		(157	)
Cash flows from financing activities:
Proceeds from debt issuance		—			229
Repayment on notes payable		(1,078	)		(733	)
Repayment on bonds payable		(121	)		(116	)
Repurchase of common stock		(7	)		—
Net cash used in financing activities - continuing operations		(1,206	)		(620	)
Net cash used in financing activities		(1,206	)		(620	)
Net change in cash and restricted cash		1,107			(861	)
Cash and  restricted cash, beginning		7,492			8,038
Cash and restricted cash, ending	$	8,599		$	7,177

6

REGIONAL HEALTH PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in 000’s)

(Unaudited)

	Six Months Ended June 30,
	2021		2020
Supplemental disclosure of cash flow information:
Cash interest paid	$	1,435	$	1,204
Supplemental disclosure of non-cash activities:
Vendor-financed insurance	$	867	$	339

See accompanying notes to unaudited consolidated financial statements

7

REGIONAL HEALTH PROPERTIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2021

NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Regional Health Properties, Inc., a Georgia corporation (“Regional Health” or “Regional” and, together with its subsidiaries, the “Company” or “we”), is a self-managed real estate investment company that invests primarily in real estate purposed for long-term care and senior living. The Company’s business primarily consists of leasing and subleasing healthcare facilities to third-party tenants, which in turn operate the facilities. The operators of the Company’s facilities provide a range of healthcare services to their patients and residents, including skilled nursing and assisted living services, social services, various therapy services, and other rehabilitative and healthcare services for both long-term and short-stay patients and residents.

As of June 30, 2021, the Company owned, leased or managed for third parties, or operated, 24 facilities, primarily in the Southeastern United States. Of the 24 facilities, the Company: (i) leased 10 skilled nursing facilities (which the Company owns) to third-party tenants, subleased eight skilled nursing facilities (which the Company leases) to third-party tenants, and operated, as of January 1, 2021 as a portfolio stabilization measure, one previously subleased skilled nursing facility (which the Company leases); (ii) leased two assisted living facilities (which the Company owns) to third-party tenants; and (iii) managed, on behalf of third-party owners, two skilled nursing facilities and one independent living facility. Accordingly, as of January 1, 2021, the Company has two primary reporting segments: (i) real estate services, which consists of the leasing and subleasing of long-term care and senior living facilities to third-party tenants, including the Company’s management of three facilities on behalf of third-party owners (“Real Estate Services”); and (ii) healthcare services, which consists of the operation of a skilled nursing facility (“Healthcare Services”).

Effective January 1, 2021, the Company terminated the subleases for two skilled nursing facilities located in Georgia (the “Wellington Lease Termination”) with affiliates of Wellington Healthcare Services II, L.P. (“Wellington”), and as a portfolio stabilization measure, the Company commenced operating one of the facilities, a previously subleased 134-bed skilled nursing facility located in Thunderbolt, Georgia (the “Tara Facility”) and entered into a new sublease agreement with an affiliate of Empire Care Centers, LLC (“Empire”) for the other facility, a 208-bed skilled nursing facility located in Powder Springs, Georgia (the “Powder Springs Facility”). The Company has entered into a Management Consulting Services Agreement (the “Vero Management Agreement”) with Vero Health Management, LLC (“Vero Health”) under which Vero Health provides management consulting services for the Tara Facility, which the Company now operates. See Note 6 – Leases, herein, and Note 6 – Leases in Part II, Item 8, “Financial Statements and Supplemental Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (“SEC”) on March 29, 2021 (the “Annual Report”), for a more detailed description of the Company’s leases.

The Company leases its currently-owned healthcare properties, and subleases its currently-leased healthcare properties, on a triple-net basis, meaning that the lessee (i.e., the third-party operator of the property) is obligated under the lease or sublease, as applicable, for all costs of operating the property, including insurance, taxes and facility maintenance, as well as the lease or sublease payments, as applicable. These leases are generally long-term in nature with renewal options and annual rent escalation clauses.

Regional Health is successor to, and a former wholly owned subsidiary of, AdCare Health Systems, Inc. (“AdCare”). On September 29, 2017, AdCare merged (the “Merger”) with and into Regional Health, which was formed as a subsidiary of AdCare for the purpose of the Merger, with Regional Health continuing as the surviving corporation in the Merger. For a description of the Merger, see Part II, Item 8, “Financial Statements and Supplemental Data”, Note 1 – Summary of Significant Accounting Policies included in the Annual Report.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations for the periods presented have been included.  Operating results for the three and six months ended June 30, 2021 and 2020 are not necessarily indicative of the results that may be expected for the fiscal year. The consolidated balance sheet at December 31, 2020 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. 

8

You should read the unaudited consolidated financial statements in this Quarterly Report on Form 10-Q (this “Quarterly Report”) together with the historical audited consolidated financial statements of the Company for the year ended December 31, 2020, included in the Annual Report. See Part II, Item 8, “Financial Statements and Supplementary Data”, Note 1 – Summary of Significant Accounting Policies included in the Annual Report, for a description of all significant accounting policies. During the three and six months ended June 30, 2021, there were no material changes to the Company’s policies.

Risks and Uncertainties

While the Company is a self-managed real estate investment company that invests primarily in real estate purposed for long-term care and senior living, the Company, when business conditions require, may undertake portfolio stabilization measures, such as operating a previously leased facility. On January 1, 2021, following the Wellington Lease Termination, the Company commenced operating the Tara Facility, which facility comprises approximately 5.0% of the total amount of the Company’s licensed patient beds. This portfolio stabilization measure exposes the Company directly to all the risks our tenants face as discussed in this “Risk and Uncertainties” section and “Risks Related to Our Business - Our portfolio stabilization measures expose the Company to the various risks facing our tenants” in Part I, Item 1.A, “Risk Factors.” in the Annual Report.

On March 11, 2020, the World Health Organization declared the outbreak of the respiratory illness caused by a novel strain of coronavirus, SARS-CoV-2, also known as COVID-19, a global pandemic. The COVID-19 pandemic has led governments and other authorities in the United States to impose measures intended to control its spread, including restrictions on freedom of movement and business operations such as travel bans, border closings, business closures, quarantines and shelter-in-place orders. The COVID-19 pandemic and the measures to protect its spread have adversely affected our business during the six months ended June 30, 2021, and we expect it will continue to adversely affect our business in the quarter ending September 30, 2021 and beyond, for a variety of reasons, including those discussed below and elsewhere in this Quarterly Report.

As of August 13, 2021, the Company is aware that each of our facilities has previously reported one or more positive cases of COVID-19 among the residents and/or operator employee populations. Many of our operators have reported incurring significant cost increases as a result of the COVID-19 pandemic, with dramatic increases for facilities with positive cases. We believe these increases primarily stem from elevated labor costs, including increased use of overtime and bonus pay, as well as a significant increase in both the cost and usage of personal protective equipment, testing equipment, processes and supplies. In terms of occupancy levels, many of our operators have reported experiencing declines, in part due to the elimination or suspension of elective hospital procedures, fewer discharges from hospitals to skilled nursing facilities (“SNFs”), and higher hospital re-admittances from SNFs.

The COVID-19 pandemic may also lead to temporary closures of nursing facilities, operated by our tenants, which also may affect our tenants’ ability to make their rental payments to us pursuant to their respective lease agreements. In addition, our tenants’ operations could be further disrupted if any of their employees, or the employees of their vendors, have, or are suspected of having, COVID-19. This could cause, and in some cases has already caused, our tenants or their vendors to experience staffing shortages, and this could potentially require our tenants and their vendors to close parts of or entire facilities, distribution centers, or other buildings to disinfect any affected areas.

We could also be adversely affected if government authorities impose upon our tenants, or their vendors, certain restrictions due to the COVID-19 pandemic. These restrictions may be in the form of mandatory closures, requested voluntary closures, bans on new admissions, restricted operations, or restrictions on the importation of necessary equipment or supplies which may adversely affect our tenants’ operations and their ability to make rental payments to us moving forward. In addition, family members may elect to keep nursing facility residents at home during the COVID-19 pandemic, thus reducing our tenants’ revenue. Currently, a number of our tenants have stopped admitting new patients due to rising COVID-19 infections which has resulted in decreased revenues.

As a result of the COVID-19 pandemic, our tenants may face lawsuits for alleged negligence associated with their responses to the emergency. The costs associated with defending, settling, or paying damages from such claims could negatively impact our tenants’ operating budgets and affect their ability to meet their obligations under our leases. Further, we may be subject to increased lawsuits arising out of our alleged actions or the alleged actions of our tenants for which they have agreed to indemnify, defend and hold us harmless. An unfavorable resolution of any such pending or future litigation could materially adversely affect us. The Company is not aware of any such lawsuits against our tenants.

If our tenants are unable to make rental payments to us pursuant to their lease obligations, whether due to the tenants’ decrease in revenues or otherwise, then, in some cases, we may be forced to either attempt to replace tenants or restructure tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to us as those currently in place.

9

While the Company has received approximately 97% of its expected fixed monthly rental receipts from tenants for the three and six months ended June 30, 2021, there are a number of uncertainties the Company faces as it considers the potential impact of COVID-19 on its business, including the length of census disruption, elevated COVID-19 operating costs related to personal protection equipment, cleaning supplies, virus testing and increased overtime due to staff illness and the extent to which federal and state funding support will offset these incremental costs for our tenants. To the extent government support is not sufficient or timely to offset these impacts, or to the extent these trends continue or accelerate and are not offset by additional government relief that is sufficient or timely, the operating results of our operators are likely to be adversely affected, and some may be unwilling or unable to pay their contractual obligations to us in full or on a timely basis, as has occurred with one of our prior operators.

We also do not know the number of facilities that will ultimately experience widespread, high-cost outbreaks of COVID-19. While we have requested reporting case numbers from our operators and the U.S. Department of Health and Human Services Centers for Medicare and Medicaid Services (“CMS”) has required additional reporting by operators, we may not receive accurate information on the number of cases, which could result in a delay in reporting. We expect to see continued increased clinical protocols for infection control within facilities and increased monitoring of employees, guests and other individuals entering facilities; however, we do not yet know if future reimbursement rates will be sufficient to cover the increased costs of enhanced infection control and monitoring. The extent of the COVID-19 pandemic’s effect on our and our operators’ operational and financial performance will depend on future developments, including the ultimate duration, spread and intensity of the outbreak, which may depend on factors such as the development and implementation of an effective vaccine and treatments for COVID-19, government funds and other support for the senior care sector and the efficacy of other policies and measures that may mitigate the impact of the pandemic, all of which are uncertain and difficult to predict. Due to these uncertainties, we are unable at this time to estimate the effect of these factors on our business, but the adverse impact on our business, results of operations, financial condition and cash flows could be material.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

Revenue Recognition and Allowances

Patient Care Revenue. Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers requires a company to recognize revenue when the company transfers control of promised goods and services to a customer. Revenue is recognized in an amount that reflects the consideration to which a company expects to receive in exchange for such goods and services. Revenue from our new Healthcare Services business segment is derived from services rendered to patients in the Tara Facility. The Company receives payments from the following sources for services rendered in our facilities: (i) the federal government under the Medicare program administered by CMS; (ii) state governments under their respective Medicaid and similar programs; (iii) commercial insurers; and (iv) individual patients and clients. The vast majority of the revenue the Company has recognized is from government sources. The Company determines the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients and other price concessions. Contractual adjustments and discounts are based on contractual agreements, discount policies and historical experience. The Company recognizes revenue at the amount that reflects the consideration the Company expects to receive in exchange for the services provided. These amounts are due from residents or third-party payors and include variable consideration for retroactive adjustments from estimated reimbursements, if any, under reimbursement programs. Performance obligations are determined based on the nature of the services provided. Revenue is recognized as performance obligations are satisfied. Estimated uncollectable amounts due from patients are generally considered implicit price concessions that are a direct reduction to net operating revenues.

Triple-Net Leased Properties. The Company’s triple-net leases provide for periodic and determinable increases in rent. The Company recognizes rental revenues under these leases on a straight-line basis over the applicable lease term when collectability is probable. Recognizing rental income on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a straight-line rent receivable that is included in straight-line rent receivable on our consolidated balance sheets. In the event the Company cannot reasonably estimate the future collection of rent from one or more tenant(s) of the Company’s facilities, rental income for the affected facilities is recognized only upon cash collection, and any accumulated straight-line rent receivable is expensed in the period in which the Company deems rent collection to no longer be probable.

10

Management Fees, Revenue from Contracts with Customers. The Company recognizes management fee revenues as services are provided. The Company has one contract to manage three facilities (the “Management Contract”), with payment for each month of service received in full on a monthly basis. The maximum penalty for service contract nonperformance under the Management Contract is $50,000 per year, payable after the end of the year.

Other revenues. The Company recognizes interest income from loans and investments, using the effective interest method when collectability is probable. The Company applies the effective interest method on a loan-by-loan basis.

Allowances. The Company assesses the collectability of its rent receivables, including straight-line rent receivables and working capital loans to tenants. The Company bases its assessment of the collectability of rent receivables and working capital loans to tenants on several factors, including payment history, the financial strength of the tenant and any guarantors, the value of the underlying collateral, and current economic conditions. If the Company’s evaluation of these factors indicates it is probable that the Company will be unable to receive the rent payments or payments on a working capital loan, then the Company provides a reserve against the recognized straight-line rent receivable asset or working capital loan for the portion that we estimate may not be recovered. Payments received on impaired loans are applied against the allowance. If the Company changes its assumptions or estimates regarding the collectability of future rent payments required by a lease or required from a working capital loan to a tenant, then the Company may adjust its reserve to increase or reduce the rental revenue or interest revenue from working capital loans to tenants recognized in the period the Company makes such change in its assumptions or estimates. In an effort to ensure a conservative presentation of the results of the Healthcare Services segment due to lack of history, the Company has provided an additional allowance for patient care receivables of 1.5% of patient revenues.

As of June 30, 2021 and December 31, 2020, the Company reserved for approximately $0.1 million and $1.4 million, respectively, of uncollected receivables. Accounts receivable, net of allowance, totaled $1.6 million at June 30, 2021 and $2.1 million at December 31, 2020.

The following table presents the Company's Accounts receivable, net of allowance for the periods presented:

(Amounts in 000’s)	June 30, 2021			December 31, 2020
Gross receivables
Real Estate Services (a)	$	777		$	3,481
Healthcare Services		925			—
Sub Total		1,702			3,481
Allowance
Real Estate Services (a)		(32	)		(1,381	)
Healthcare Services		(77	)		—
Sub Total		(109	)		(1,381	)
Accounts receivable, net of allowance	$	1,593		$	2,100

(a) See Note 6– Leases for details on the impact of the Wellington Lease Termination.

Pre-Paid Expenses and Other

As of June 30, 2021 and December 31, 2020, the Company had approximately $1.0 million and $0.3 million, respectively, in pre-paid expenses and other, the $0.7 million increase is related to insurance for the Tara Facility operations, while the other amounts are predominantly for directors’ and officers’ insurance, NYSE American annual fees and mortgage insurance premiums.

Accounts Payable

The following table presents the Company's Accounts payable for the periods presented:

(Amounts in 000’s)	June 30, 2021		December 31, 2020
Accounts payable
Real Estate Services	$	3,078	$	3,008
Healthcare Services		305		—
Total Accounts payable	$	3,383	$	3,008

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Other liabilities

As of June 30, 2021 and December 31, 2020, the Company had approximately $1.5 million and $1.4 million, in Other liabilities, consisting of security lease deposits and sublease improvement funds.

Other expense, net

The Company has retained professional services to evaluate and assist with possible opportunities to improve the Company’s capital structure.

Leases and Leasehold Improvements

The Company leases certain facilities and equipment in the normal course of business. At the inception of each lease, the Company performs an evaluation to determine whether the lease should be classified as an operating lease or capital lease. As of June 30, 2021, all of the Company’s leased facilities are accounted for as operating leases. For operating leases that contain scheduled rent increases, the Company records rent expense on a straight-line basis over the term of the lease. Leasehold improvements are amortized over the shorter of the useful life of the asset or the lease term.

In accordance with Accounting Standards Update (“ASU”) ASU 2016-02, Leases, as codified in ASC 842, the Company recognizes both right of use assets and lease liabilities for leases in which we lease land, real property or other equipment, having elected the practical expedient to maintain the prior operating lease classification for leases entered into prior to January 1, 2019. We assess any new contracts or modification of contracts in accordance with ASC 842 to determine the existence of a lease and its classification. We are reporting revenues and expenses for real estate taxes and insurance, where the lessee has not made those payments directly to a third-party in accordance with their respective leases with us.

The following table summarizes real estate tax recognized on our consolidated statements of operations for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in 000’s)	2021		2020		2021		2020
Rental revenues	$	98	$	119	$	231	$	245
Other operating expenses	$	98	$	119	$	231	$	245

Additionally, we expense certain leasing costs, other than leasing commissions, as they are incurred. Prior GAAP provided for the deferral and amortization of such costs over the applicable lease term. The present value of minimum lease payments was calculated on each lease, using a discount rate of 7.98% for the Company’s leases that approximated our incremental borrowing rate as of January 1, 2019, and the current lease term. See Note 6– Leases for more information on the Company’s operating leases.

Insurance

We maintain general liability, professional liability, and other insurance policies in amounts and with coverage and deductibles we believe are appropriate, based on the nature and risks of our business, historical experience, availability, and industry standards, including for the operations at the Tara Facility. Our current policies provide for deductibles for each claim and contain various exclusions from coverage. The Company has self-insured against professional and general liability claims related to its healthcare operations that were discontinued during 2014 and 2015 in connection with its transition from an owner and operator of healthcare properties to a healthcare property holding and leasing company (the “Transition”). See Part II, Item 8, “Financial Statements and Supplementary Data”, Note 14 – Commitments and Contingencies in the Annual Report for more information. The Company evaluates quarterly the adequacy of its self-insurance reserve based on a number of factors, including: (i) the number of actions pending and the relief sought; (ii) analyses provided by defense counsel, medical experts or other information which comes to light during discovery; (iii) the legal fees and other expenses anticipated to be incurred in defending the actions; (iv) the status and likely success of any mediation or settlement discussions, including estimated settlement amounts and legal fees and other expenses anticipated to be incurred in such settlement, as applicable; and (v) the venues in which the actions have been filed or will be adjudicated. The Company believes that most of the professional and general liability actions are defensible and intends to defend them through final judgment unless settlement is more advantageous to the Company. Accordingly, the self-insurance reserve reflects the Company’s estimate of settlement amounts for the pending actions, if applicable, and legal costs of settling or litigating the pending actions, as applicable. Because the self-insurance reserve is based on estimates, the amount of the self-insurance reserve may not be sufficient to cover the settlement amounts actually incurred in settling the pending actions, or the legal costs actually incurred in settling or litigating the pending actions. See Note 7 – Accrued Expenses. In addition, the Company maintains certain other insurance programs, including commercial general liability, property, casualty, directors’ and officers’ liability, crime and employment practices liability.

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Earnings Per Share

Basic earnings per share is computed by dividing net income or loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the respective period. Diluted earnings per share is similar to basic earnings per share except that the net income or loss is adjusted by the impact of the weighted-average number of shares of common stock outstanding including potentially dilutive securities (such as options, warrants and non-vested common stock) when such securities are not anti-dilutive. Potentially dilutive securities from options, warrants and unvested restricted shares are calculated in accordance with the treasury stock method, which assumes that proceeds from the exercise of all options and warrants with exercise prices exceeding the average market value are used to repurchase common stock at market value. The incremental shares remaining after the proceeds are exhausted represent the potentially dilutive effect of the securities.

Securities outstanding that were excluded from the computation, because they would have been anti-dilutive were as follows:

	June 30,
(Share amounts in 000’s)	2021		2020
Stock options		13		15
Warrants - employee		49		49
Warrants - non employee		9		9
Total anti-dilutive securities		71		73

The weighted average contractual terms in years for these securities as of June 30, 2021, with no intrinsic value, are 3.0 years for the stock options and 2.5 years for the warrants.

Recently Issued Accounting Pronouncements

In July 2021, the FASB issued ASU 2021-05—Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments, which amends the lease classification requirements for lessors. Lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if the lease would have been classified as a sales-type lease or a direct financing lease and the lessor would have otherwise recognized a day-one loss. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2021-05 on its consolidated financial statements.

See Part II, Item 8, “Financial Statements and Supplementary Data”, Note 1 – Summary of Significant Accounting Policies included in the Annual Report, for a description of the other accounting pronouncements the Company is currently evaluating.

NOTE 2. LIQUIDITY

Overview

The Company intends to pursue measures to grow its operations, streamline its cost infrastructure and otherwise increase liquidity, including: (i) refinancing or repaying debt to reduce interest costs and mandatory principal repayments, with such repayment to be funded through potentially expanding borrowing arrangements with certain lenders; (ii) increasing future lease revenue through acquisitions and investments in existing properties; (iii) modifying the terms of existing leases; (iv) replacing certain tenants who default on their lease payment terms; and (v) reducing other and general and administrative expenses.

Management anticipates access to several sources of liquidity, including cash on hand, cash flows from operations, and debt refinancing during the twelve months following the date of this filing. At June 30, 2021, the Company had $5.6 million in unrestricted cash. During the six months ended June 30, 2021, the Company generated positive cash flow from continuing operations of $2.5 million and anticipates continued positive cash flow from operations in the future, subject to the continued uncertainty of the COVID-19 pandemic and its impact on the Company’s business, financial condition and results of operations.

On December 1, 2020, the Company entered into the Wellington Lease Termination with the following affiliates of Wellington,  3223 Falligant Avenue Associates, L.P. (“Tara Tenant”) and 3460 Powder Springs Road Associates, L.P. (“Powder Springs Tenant”, together with Tara Tenant, the “Wellington Tenants”). The Wellington Tenants subleased two of the Company’s eight Georgia facilities, leased under a prime lease, under agreements dated January 31, 2015, as subsequently amended (the “Wellington Subleases”). Per the Wellington Lease Termination, possession, custody, control and operation of the Tara Facility and Powder Springs Facility (the “Wellington Facilities”) transitioned from the Wellington Tenants to the Company (the “Wellington Transition”) at 12:01 a.m. on January 1, 2021 (the “Wellington Transition Date”), pursuant to the terms and

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provisions of the Operations Transfer Agreements (the “OTAs”), which the Company and the Wellington Tenants entered into in connection with the Wellington Lease Termination and which included customary termination events.

The OTAs were subject to customary closing conditions and representations and warranties. The Wellington Transition was subject to the Georgia Department of Community Health’s (“DCH”) approval of the Change in Ownership Applications (the “Applications”), which were filed by Regional on December 2, 2020. On the Wellington Transition Date, the Wellington Tenants: (i) paid all cash on hand at the Wellington Facilities to Regional; (ii) transferred and assigned, to the Company, all accounts receivable previously due to the Wellington Tenants as of the Wellington Transition Date; and (iii) entered into commercially reasonable Deposit Account Control Agreements with Regional with respect to all of the Wellington Tenants’ bank accounts that receive accounts receivable remittances. Additionally, on the Wellington Transition Date, the Company became liable for certain expenses including approximately $1.7 million of bed taxes in arrears. On January 1, 2019, security agreements executed between the Company and the Wellington Tenants provided for certain of the Wellington Tenants assets as collateral to the Company in the event of any default under prior agreements with the Company (the “Security Agreements”). These Security Agreements survive the Wellington Transition and will remain in full force and effect in order to assist Regional in collecting the accounts receivable.

Scheduled rent payments under the Wellington Subleases constituted approximately 23% of the Company’s anticipated annual revenue in 2020. As of December 31, 2020, Regional recorded an estimated allowance of $1.4 million against a rent receivable of $2.7 million from the Wellington Tenants. During the six months ended June 30, 2021, the Company collected $3.2 million pursuant to the Wellington Lease Termination (excluding $0.2 million insurance refund) and paid $1.0 million to partially satisfy the Wellington Lease Termination obligation of approximately $1.7 million of bed taxes in arrears and $0.1 million in collection expenses. The Company provides no assurance that we will be able to collect any of the additional $1.3 million in rent arrears in excess of the net $1.4 million already collected.

During the three and six months ended June 30, 2021, the Company recognized $0.1 million and $0.5 million, respectively, of variable rent for the Powder Springs Facility and, as of the date of filing this Quarterly Report, has collected all of such variable rent replacing approximately $1.0 million of cash rent previously anticipated from the Wellington Tenant. The Tara Facility operations performance during the six months ended June 30, 2021 has been sufficient to cover approximately 54% the rent the Company is obligated to pay under its lease. For further information on the Tara Facility performance see Note 13 – Segment Results.

The Company is current with all of its Notes payable and other debt as described in Note 8 – Notes Payable and Other Debt. The Company has benefited from various, now expired, stimulus measures made available to it through the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted by Congress in response to the COVID-19 pandemic which allowed for, among other things: (i) a deferral of debt service payments on U.S. Department of Agriculture (“USDA”) loans to maturity; (ii) an allowance for debt service payments to be made out of replacement reserve accounts for U.S. Department of Housing and Urban Development (“HUD”) loans; and (iii) debt service payments to be made by the U.S. Small Business Administration (the “SBA”) on all SBA loans. For further information, see Note 8 – Notes Payable and Other Debt.

Series A Preferred Dividend Suspension

On June 8, 2018, the board of directors of Regional (the “Board”) indefinitely suspended quarterly dividend payments with respect to the 10.875% Series A Cumulative Redeemable Preferred Shares (the “Series A Preferred Stock”). As of June 30, 2021, as a result of the suspension of the dividend payment on the Series A Preferred Stock commencing with the fourth quarter 2017 dividend period, the Company has $32.4 million of undeclared Series A Preferred Stock dividends in arrears. The Board believes that the dividend suspension will provide the Company with additional funds to meet, in part, its ongoing liquidity needs. As the Company has failed to pay cash dividends on the outstanding Series A Preferred Stock in full for more than four dividend periods, the annual dividend rate on the Series A Preferred Stock for the fifth and future missed dividend periods has increased to 12.875%, which is equivalent to $3.20 per share each year, commencing on the first day after the missed fourth quarterly payment (October 1, 2018) and continuing until the second consecutive dividend payment date following such time as the Company has paid all accumulated and unpaid dividends on the Series A Preferred Stock in full in cash.

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Debt

 As of June 30, 2021, the Company had $54.2 million in indebtedness, net of $1.3 million deferred financing, and unamortized discounts. The Company anticipates net principal repayments of approximately $6.4 million during the next twelve-month period, including approximately $0.5 million other debt on August 25, 2021 (the “KeyBank Exit Notes”), $3.6 million in senior debt, other mortgage indebtedness on May 1, 2022 (the “Meadowood Credit Facility”) and $1.4 million of routine debt service amortization, $0.8 million of current maturities of other debt (including $0.3 million related to insurance financing for the Tara Facility operations), and a $0.1 million payment of bond debt. The Company is in negotiations to extend the maturity date of the KeyBank Exit Notes and Meadowood Credit Facility.

Debt Covenant Compliance

As of June 30, 2021, the Company was in compliance with the various financial and administrative covenants under the Company’s outstanding credit-related instruments.

Evaluation of the Company’s Ability to Continue as a Going Concern

Under the accounting guidance related to the presentation of financial statements, the Company is required to evaluate, on a quarterly basis, whether or not the Company’s current financial condition, including its sources of liquidity at the date that the consolidated financial statements are issued, will enable the Company to meet its obligations as they come due arising within one year of the date of the issuance of the Company’s consolidated financial statements and to make a determination as to whether or not it is probable, under the application of this accounting guidance, that the Company will be able to continue as a going concern. The Company’s consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

In applying applicable accounting guidance, management considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows, the Company’s obligations due over the next twelve months, and the Company’s recurring business operating expenses.

The Company concludes that it is probable that the Company will be able to meet its obligations arising within one year of the date of issuance of these consolidated financial statements within the parameters set forth in the accounting guidance.

NOTE 3. CASH AND RESTRICTED CASH

The following presents the Company's cash and restricted cash:

(Amounts in 000’s)	June 30, 2021		December 31, 2020
Cash	$	5,633	$	4,186
Restricted cash:
Cash collateral		62		124
HUD and other replacement reserves		1,827		1,675
Escrow deposits		760		1,190
Restricted investments for debt obligations		317		317
Total restricted cash		2,966		3,306
Total cash and restricted cash	$	8,599	$	7,492

Cash collateral—In securing mortgage financing from certain lending institutions, the Company and certain of its wholly-owned subsidiaries are required to deposit cash to be held as collateral in accordance with the terms of such loan agreements.

HUD and other replacement reserves—The regulatory agreements entered into in connection with the financing secured through HUD require monthly escrow deposits for replacement and improvement of the HUD project assets.

Escrow deposits—In connection with financing secured through the Company’s lenders, several wholly-owned subsidiaries of the Company are required to make monthly escrow deposits for taxes and insurance.

Restricted cash for debt obligations—In compliance with certain financing and insurance agreements, the Company and certain wholly-owned subsidiaries of the Company are required to deposit cash held as collateral by the lender or in escrow with certain designated financial institutions.

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NOTE 4. PROPERTY AND EQUIPMENT

The following table sets forth the Company’s property and equipment:

(Amounts in 000’s)	Estimated Useful Lives (Years)		June 30, 2021			December 31, 2020
Buildings and improvements	5-40		$	65,687		$	65,629
Equipment and computer related	2-10			5,047			5,139
Land (1)		—		2,776			2,776
Construction in process		—		5			69
				73,515			73,613
Less: accumulated depreciation and amortization				(22,160	)		(21,080	)
Property and equipment, net			$	51,355		$	52,533

(1) Includes $0.1 million of land improvements with an average estimated useful remaining life of approximately 7.4 years.

The following table summarizes total depreciation and amortization expense for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in 000’s)	2021		2020		2021		2020
Depreciation	$	543	$	544	$	1,083	$	1,094
Amortization		109		225		219		451
Total depreciation and amortization expense	$	652	$	769	$	1,302	$	1,545

NOTE 5. INTANGIBLE ASSETS AND GOODWILL

Intangible assets and Goodwill consist of the following:

(Amounts in 000’s)	Bed licenses (included in property and equipment)(a)			Bed Licenses - Separable (b)		Lease Rights			Total			Goodwill (b)
Balances, December 31, 2020
Gross	$	14,276		$	2,471	$	206		$	16,953		$	1,585
Accumulated amortization		(3,754	)		—		(48	)		(3,802	)		—
Net carrying amount	$	10,522		$	2,471	$	158		$	13,151		$	1,585
Amortization expense		(207	)		—		(12	)		(219	)		—
Balances, June 30, 2021
Gross		14,276			2,471		206			16,953			1,585
Accumulated amortization		(3,961	)		—		(60	)		(4,021	)		—
Net carrying amount	$	10,315		$	2,471	$	146		$	12,932		$	1,585

(a) Non-separable bed licenses are included in property and equipment as is the related accumulated amortization expense (see Note 4 – Property and Equipment).

(b) The Company does not amortize indefinite-lived intangibles, which consist of separable bed licenses and goodwill.

The following table summarizes amortization expense for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in 000’s)	2021		2020		2021		2020
Bed licenses	$	103	$	103	$	207	$	207
Lease rights		6		122		12		244
Total amortization expense	$	109	$	225	$	219	$	451

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Expected amortization expense for the year ended December 31, for all definite-lived intangibles, for each of the next five years and thereafter is as follows: 

(Amounts in 000’s)	Bed Licenses		Lease Rights
2021 (a)	$	207	$	12
2022		414		24
2023		414		23
2024		414		18
2025		414		18
Thereafter		8,452		51
Total expected amortization expense	$	10,315	$	146

(a) Estimated amortization expense for the year ending December 31, 2021, includes only amortization to be recorded after June 30, 2021.

NOTE 6.LEASES

Operating Leases

Facilities Leased to the Company - The Company leases nine SNFs from unaffiliated owners under non-cancelable leases, all of which have rent escalation clauses and provisions requiring payment of real estate taxes, insurance and maintenance costs by the lessee. Except for the Tara Facility, which the Company is operating, each of the SNFs that are leased by the Company are subleased to and operated by third-party tenants. The Company also leases certain office space located in Suwanee, Georgia. The weighted average remaining lease term for our nine leased facilities is approximately 6.3 years. As of June 30, 2021, the Company is in compliance with all operating lease financial covenants.

Future Minimum Lease Payments

Future minimum lease payments for the year ended December 31, for each of the next five years and thereafter is as follows:

(Amounts in 000’s)	Future rental payments		Accretion of lease liability (1)			Operating lease obligation
2021 (2)	$	3,336	$	(106	)	$	3,230
2022		6,752		(591	)		6,161
2023		6,851		(1,050	)		5,801
2024		6,958		(1,494	)		5,464
2025		7,095		(1,950	)		5,145
Thereafter		12,736		(4,497	)		8,239
Total	$	43,728	$	(9,688	)	$	34,040

(1) Weighted average discount rate 7.98%.

(2) Estimated minimum lease payments for the year ending December 31, 2021 include only payments to be paid after June 30, 2021.

For further details regarding the Company’s leases from unaffiliated owners under non-cancelable leases and which comprise the future minimum lease payments of the Company, see Part II, Item 8, “Financial Statements and Supplementary Data”, Note 6 - Leases included in the Annual Report.

Facilities Leased or Subleased by the Company -  As of June 30, 2021, the Company leased or subleased 20 facilities (12 owned by the Company and eight leased to the Company), to third-party tenants on a triple net basis, meaning that the lessee (i.e., the third-party tenant of the property) is obligated under the lease or sublease, as applicable, for all costs of operating the property, including insurance, taxes and facility maintenance, as well as the lease or sublease payments, as applicable. The weighted average remaining lease term for our facilities is approximately 6.0 years.

Empire. Following the Wellington Lease Termination, effective January 1, 2021, Regional leased the Powder Springs Facility to PS Operator LLC (“PS Operator”), an affiliate of Empire, pursuant to a sublease (the “PS Sublease”).

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The PS Sublease will expire on August 1, 2027, subject to two five-year optional extensions. For the first six months, the base rent under the PS Sublease will equal the adjusted earnings before interest, tax, depreciation, amortization, and rent (“EBITDAR”) as defined in the PS Sublease, of PS Operator, to the extent derived from the Powder Springs Facility. For months seven through twenty-four, the base rent will equal 80% of the Adjusted EBITDAR (as defined in the PS Sublease); however, beginning with month thirteen, the base rent may not exceed $150,000 per month. Beginning with month twenty-five, the base rent will be $140,000 per month.

For the first three months, if Adjusted EBITDAR was less than $0, PS Operator would not have paid any base rent and the Company would have reimbursed PS Operator an amount equal to the amount by which each period’s Adjusted EBITDAR was less than $0. Beginning with the fourth month and thereafter, the PS Sublease became a “triple net” lease with PS Operator responsible for payment of all expenses in addition to rent.

During the three and six months ended June 30, 2021, the Company recognized $0.1 million and $0.5 million of variable rent respectively for the Powder Springs Facility and $0.1 million each month during the six month period ended June 30, 2021, in straight-line rent.

If the monthly average adjusted cash flows of PS Operator (as described in the PS Sublease) is less than $100,000 for any consecutive three-month period after the sixth month of the PS Sublease, then Regional may terminate the PS Sublease subject to the conditions set forth in the PS Sublease. The PS Sublease also includes customary covenants, events of default and indemnification obligations.

Sublease Termination

Wellington. Two of the Company’s eight Georgia facilities, leased under a prime lease, were subleased to affiliates of Wellington under the Wellington Subleases. The Wellington Subleases, which were due to expire August 31, 2027, related to the Tara Facility and the Powder Springs Facility.

On December 1, 2020, the Company entered into the Wellington Lease Termination with the Wellington Tenants, Wellington, as guarantor, and Mansell Court Associates LLC (“Pledgor”). Tenants, Wellington and Pledgor, together with each of their respective affiliates, shareholders, partners, members, managers, officers, directors and employees thereof, are the “Wellington Parties”.

The Wellington Transition occurred at 12:01 a.m. on January 1, 2021, pursuant to the terms and provisions of the OTAs which the Company and the Wellington Tenants entered into in connection with the Wellington Lease Termination, which included customary termination events.

The OTAs were subject to customary closing conditions and representations and warranties. The Wellington Transition was subject to DCH approval of the Applications, which were filed by Regional on December 2, 2020. On the Wellington Transition Date, the Wellington Tenants: (i) paid all cash on hand at the Wellington Facilities to Regional; (ii) transferred and assigned to the Company all accounts receivable previously due to the Wellington Tenants as of the Wellington Transition Date; and (iii) entered into commercially reasonable Deposit Account Control Agreements with Regional with respect to all of the Wellington Tenants’ bank accounts that receive accounts receivable remittances. Additionally, on the Wellington Transition Date, the Company became liable for certain expenses including approximately $1.7 million of bed taxes in arrears. The Security Agreements survive the Wellington Transition and will remain in full force and effect in order to assist Regional in collecting the accounts receivable.

As of December 31, 2020, Regional recorded an estimated allowance of $1.4 million against a rent receivable of $2.7 million from the Wellington Tenants. During the six months ended June 30, 2021, the Company collected $3.2 million pursuant to the Wellington Lease Termination (excluding $0.2 million insurance refund) and paid $1.0 million to partially satisfy the Wellington Lease Termination obligation of approximately $1.7 million of bed taxes in arrears and approximately $0.1 million in collection expenses. The Company provides no assurance that we will be able to collect any of the additional $1.3 million in rent arrears in excess of the net $1.4 million already collected. Scheduled rent payments under the Wellington Subleases constituted approximately 23% of the Company’s anticipated annual revenue in 2020.

During the three and six months ended June 30, 2021, the Company recognized $0.1 million and $0.5 million of variable rent for the Powder Springs Facility and, as of the date of filing this Quarterly Report, has collected all of such variable rent replacing approximately $1.0 million of cash rent previously anticipated for the Wellington Tenant. The Tara Facility operations performance during the six months ended June 30, 2021 has been sufficient to cover approximately 54% of the rent the Company is obligated to pay under its lease. For further information on the Tara Facility performance see Note 13 – Segment Results.

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When the Wellington Transition occurred, all agreements executed prior to the Wellington Lease Termination with the Wellington Parties, other than the Security Agreements, terminated automatically. Additionally, the Wellington Parties and Regional agreed to a mutual release whereby each party releases, acquits, and forever discharges the other party from any and all charges, complaints, claims, liabilities, demands, costs, losses, debts, and expenses of any nature whatsoever (including attorneys’ fees and costs actually incurred), known or unknown, suspected or unsuspected, accrued or not accrued, whether in law or in equity, that existed from the beginning of time to the Wellington Transition Date.

Subject to provisions in the OTAs and the Wellington Lease Termination, Regional is not liable for any contractual obligations or liabilities of the Wellington Parties owed to third-parties arising prior to the Wellington Transition Date. Regional will pay and/or assume all vacation days, sick days and paid time off accruing on or before the Wellington Transition Date.

Regional has indemnified the Wellington Parties from liabilities arising from or relating to any unpaid nursing home provider fees relating in any way to the Tara Facility and Powder Springs Facility for the period prior to and/or after December 1, 2020.

Aspire. On November 30, 2018, the Company leased or subleased to affiliates of Aspire Regional Partners, Inc. (“Aspire”) management, formerly affiliated with MSTC Development Inc., five facilities located in Ohio (collectively, “Aspire Sublessees”) pursuant to separate sublease agreements (the “Aspire Subleases”), whereby the Aspire Sublessees took possession of, and commenced operating, the facilities (the “Aspire Facilities”) as tenant or subtenant. The Aspire Subleases became effective on December 1, 2018 and are structured as triple net leases. The Company agreed to indemnify Aspire against any and all liabilities imposed on them as arising from the former operator, capped at $8.0 million. The Company has assessed the fair value of the indemnity agreements as not material to the consolidated financial statements at June 30, 2021.

Symmetry. Affiliates (the “Symmetry Tenants”) of Healthcare Management, LLC (“Symmetry” or “Symmetry Healthcare”) leased the following facilities from the Company, pursuant to separate lease agreements which expire in 2030 (the “Symmetry Leases”): (i) the Company’s 106-bed, SNF located in Sylvia, North Carolina (the “Mountain Trace Facility”); (ii) the Company’s 96-bed, SNF located in Sumter, South Carolina (the “Sumter Facility”); and (iii) the Company’s 84-bed, SNF located in Georgetown, South Carolina (the “Georgetown Facility”). On June 27, 2018, the Company notified Blue Ridge of Sumter, LLC, the tenant with respect to the Sumter Facility (the “Sumter Tenant”), and Blue Ridge on the Mountain, LLC, the tenant with respect to the Mountain Trace Facility (the “Mountain Trace Tenant”), that continued breach of the payment terms of the applicable Symmetry Lease would constitute an event of default. The Symmetry Tenants had alleged that the Company was in material breach of each of the Symmetry Leases with regard to deferred maintenance and were withholding rental payments on the basis of such allegations.  

On January 28, 2019, the Company reached an agreement with the Symmetry Tenants with respect to the Symmetry Leases, pursuant to which the Symmetry Tenants agreed to a $0.8 million (including approximately $0.06 million finance fees) payment plan for the rent arrears (the “Symmetry Payment Plan”). On February 28, 2019, the Company and the Mountain Trace Tenant mutually terminated the lease with respect to the Mountain Trace Facility and operations at the facility were transferred to Vero Health X, LLC, an affiliate of Vero Health, and hereafter also referred to as Vero Health. The Symmetry Tenants paid $0.1 million of the Symmetry Payment Plan during the six months ended June 30, 2021 and $0.1 million during the six months ended June 30, 2020. In February 2021, the Symmetry Tenants completed the Symmetry Payment Plan, upon completion of which the Company recognized $0.05 million in “Other revenues” having previously recognized $0.01 million prior to the year ended December 31, 2019.

Vero Health. On February 28, 2019, the Company entered into a lease agreement (the “Vero Health Lease”) with Vero Health, providing that Vero Health would take possession of and operate the Mountain Trace Facility located in North Carolina. The Vero Health Lease became effective, upon the termination of the prior Mountain Trace Tenant mutual lease termination on March 1, 2019.  

Peach Health. In connection with a master sublease agreement that the Company entered into with affiliates of Peach Health Group, LLC (“Peach Health”) as of June 18, 2016 and amended on March 30, 2018, the Company extended a line of credit to Peach Health (the “Peach Line”), which was subordinated to a line of credit extended to Peach Health by a third-party lender (the “Peach Working Capital Facility”). On August 27, 2020, subsequent to Peach Health repaying its Peach Working Capital Facility, the Company and Peach Health modified the Peach Line to: (i) reduce the then $1.3 million outstanding balance under the Peach Line to approximately $0.5 million, in connection with which Peach Health paid to the Company $0.45 million in cash and the Company accepted $0.35 million non-cash payment in exchange for Peach Health assuming from the Company certain bed tax liabilities related to facilities their affiliates operate; (ii) extend the maturity date of the Peach Line to August 1, 2025; (iii) decrease the interest rate from 16.5% to 8% per annum; and (iv) provide that Peach Health will not pledge, hypothecate or grant any security interest in their collateral to any other party, other than their current arrangement with the SBA, without the Company’s prior written consent. The remaining balance under the Peach Line shall be paid by Peach Health to the Company in 60 equal monthly installments. During the year ended December 31, 2019, the Company suspended revenue recognition on the Peach Line interest income due pursuant to the subordination of the Peach Line to the Peach Working Capital Facility. Upon modification to the Peach Line on August 27, 2020, the Company recommenced interest income recognition.

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Notes Receivable: At June 30, 2021 and December 31, 2020, approximately $0.4 million was outstanding on the Peach Line.

Future Minimum Lease Receivables

Future minimum lease receivables for the year ended of December 31, for each of the next five years and thereafter is as follows: 

	(Amounts in 000's)
2021 (a)	$	6,276
2022		13,519
2023		15,477
2024		15,299
2025		13,702
Thereafter		33,555
Total	$	97,828

(a) Estimated minimum lease receivables for the year ending December 31, 2021 include only payments scheduled to be received after June 30, 2021.

For further details regarding the Company’s leased and subleased facilities to third-party operators, including a full summary of the Company’s leases to third-parties and which comprise the future minimum lease receivables of the Company, see Part II, Item 8, “Financial Statements and Supplementary Data”, Note 6 - Leases and Note 9 – Acquisitions and Dispositions included in the Annual Report.

NOTE 7. ACCRUED EXPENSES

Accrued expenses consist of the following:

(Amounts in 000’s)	June 30, 2021		December 31, 2020
Accrued employee benefits and payroll-related	$	541	$	218
Real estate and other taxes (1)		1,257		491
Self-insured reserve (2)		168		183
Accrued interest		284		424
Unearned rental revenue		42		41
Other accrued expenses		1,028		868
Total accrued expenses	$	3,320	$	2,225

(1) Includes approximately $0.7 million of bed taxes in arrears related to the Wellington Transition and approximately $0.3 million bed tax accrual for the six months ended June 30, 2021 for the Healthcare Services segment.

(2) The Company self-insures against professional and general liability cases incurred prior to the Transition and uses a third-party administrator and outside counsel to manage and defend the claims (see Note 12 - Commitments and Contingencies).

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NOTE 8. NOTES PAYABLE AND OTHER DEBT

See Part II, Item 8, “Financial Statements and Supplementary Data”, Note 8 – Notes Payable and Other Debt included in the Annual Report for a detailed description of all the Company’s debt facilities.

Notes payable and other debt consists of the following:

(Amounts in 000’s)	June 30, 2021			December 31, 2020
Senior debt—guaranteed by HUD	$	30,646		$	31,104
Senior debt—guaranteed by USDA		13,008			13,139
Senior debt—guaranteed by SBA		615			628
Senior debt—bonds		6,379			6,500
Senior debt—other mortgage indebtedness		3,555			3,631
Other debt		1,291			822
Subtotal		55,494			55,824
Deferred financing costs		(1,202	)		(1,250	)
Unamortized discount on bonds		(129	)		(135	)
Notes payable and other debt	$	54,163		$	54,439

The following is a detailed listing of the debt facilities that comprise each of the above categories:

(Amounts in 000’s)
Facility	Lender	Maturity	Interest Rate (a)			June 30, 2021		December 31, 2020
Senior debt - guaranteed by HUD (b)
The Pavilion Care Center	Orix Real Estate Capital	12/01/2027	Fixed	4.16	%	$	925	$	986
Hearth and Care of Greenfield	Orix Real Estate Capital	08/01/2038	Fixed	4.20	%		1,883		1,920
Woodland Manor	Midland State Bank	10/01/2044	Fixed	3.75	%		4,902		4,968
Glenvue	Midland State Bank	10/01/2044	Fixed	3.75	%		7,613		7,712
Autumn Breeze	KeyBank	01/01/2045	Fixed	3.65	%		6,617		6,705
Georgetown	Midland State Bank	10/01/2046	Fixed	2.98	%		3,350		3,394
Sumter Valley	KeyBank	01/01/2047	Fixed	3.70	%		5,356		5,419
Total						$	30,646	$	31,104
Senior debt - guaranteed by USDA (c)
Coosa (d)	Metro City	09/30/2035	Prime + 1.50%	5.50	%		5,101		5,149
Mountain Trace (e)	Community B&T	12/24/2036	Prime + 1.75%	5.75	%		3,914		3,972
Southland (f)	Cadence Bank, NA	07/27/2036	Prime + 1.50%	6.00	%		3,993		4,018
Total						$	13,008	$	13,139
Senior debt - guaranteed by SBA (g)
Southland	Cadence Bank, NA	07/27/2036	Prime + 2.25%	5.50	%		615		628
Total						$	615	$	628

(a) Represents cash interest rates as of June 30, 2021 as adjusted for interest rate floor limitations, if applicable. The rates exclude amortization of deferred financing costs, which range from 0.08% to 0.53% per annum.

(b) For the seven SNFs, the Company has term loans with financial institutions that are insured 100% by HUD. The loans are secured by, among other things, an assignment of all rents paid under any existing or future leases and rental agreements with respect to the underlying facility. The loans contain customary events of default, including fraud or material misrepresentations or material omission, the commencement of a forfeiture action or proceeding, failure to make required payments, and failure to perform or comply with certain agreements. Upon the occurrence of certain events of default, the lenders may, after receiving the prior written approval of HUD, terminate the loans and all amounts under the loans will become immediately due and payable. In connection with entering into each loan, the Company entered into a healthcare regulatory agreement and a promissory note, each containing customary terms and conditions. Pursuant to the CARES Act, up to three months of debt service payments for six of the credit facilities can be made from our restricted cash reserves.

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(c) For the three SNFs, the Company has term loans with financial institutions that are insured 70% to 80% by the USDA. The loans have an annual renewal fee for the USDA guarantee of 0.25% of the guaranteed portion. The loans have prepayment penalties of 1% through 2021, capped at 1% for the remainder of the first 10 years of the term and 0% thereafter except Coosa (as defined below) which is 1% thereafter.

(d) Pursuant to the CARES Act, the monthly principal and interest payments due May 1, 2020 through September 1, 2020 for the loan for that certain 124-bed SNF commonly known as Coosa, located in Glencoe, Alabama, were deferred (a part of the “USDA Payment Program”). Monthly payments that commenced on October 1, 2020 were being applied to current interest, then deferred interest until the deferred interest is paid in full on April 1, 2021. Payments have been re-amortized over the remaining term of the loan.

(e) Pursuant to the CARES Act, the monthly principal and interest payments due May 1, 2020 through August 1, 2020 for the Mountain Trace Facility loan were deferred. Monthly payments that commenced on September 1, 2020 were being applied to current interest, then deferred interest until the deferred interest was paid in full on April 1, 2021. Payments have been re-amortized over the extended term of the loan.

(f) Pursuant to the CARES Act, the monthly principal and interest payments due May 1, 2020 through October 1, 2020 for the loan for that certain 126-bed SNF commonly known as Southland, located in Dublin, Georgia, were deferred as a part of the USDA Payment Program. Monthly payments recommenced on November 1, 2020 with payments through February 2021 being applied to principal and interest. Monthly payments that commenced on March 1, 2021 are being applied to current interest, then deferred interest until the deferred interest is paid in full, payments will be re-amortized over the extended term of the loan.

(g) For the one SNF, commonly known as Southland, the Company has a term loan with a financial institution, which is 75% insured by the SBA. The SBA funded two monthly debt payments during the three months ended March 31, 2021 and six payments commencing on March 1, 2020 and ending on August 1, 2020.

(Amounts in 000’s)
Facility	Lender	Maturity	Interest Rate (a)			June 30, 2021		December 31, 2020
Senior debt - bonds
Eaglewood Bonds Series A	City of Springfield, Ohio	05/01/2042	Fixed	7.65	%	$	6,379	$	6,379
Eaglewood Bonds Series B (b)	City of Springfield, Ohio	05/01/2021	Fixed	8.50	%		—		121
Total						$	6,379	$	6,500

(a) Represents cash interest rates as of June 30, 2021. The rates exclude amortization of deferred financing of approximately 0.01% per annum.

(b) On May 3, 2021, in accordance with the terms of The City of Springfield, Ohio First Mortgage Revenue Series 2012 B Bonds, the Company fully repaid approximately $0.1 million in outstanding principal and interest.

(Amounts in 000’s)
Facility	Lender	Maturity	Interest Rate (a)			June 30, 2021		December 31, 2020
Senior debt - other mortgage indebtedness
Meadowood	Exchange Bank of Alabama	05/01/2022	Fixed	4.50	%		3,555		3,631
Total						$	3,555	$	3,631

(a) Represents cash interest rates as of June 30, 2021 as adjusted for interest rate floor limitations, if applicable. The rates exclude amortization of deferred financing costs of 0.30% per annum.

(Amounts in 000’s)
Lender	Maturity	Interest Rate			June 30, 2021		December 31, 2020
Other debt
First Insurance Funding (a)	03/01/2022	Fixed	3.63	%	$	294	$	94
Servarus Financial Inc. (b)	11/01/2021	Fixed	5.18	%		273		—
Key Bank	08/25/2021	Fixed	0.00	%		495		495
FountainHead Commercial Capital - PPP Loan (c)	04/16/2022	Fixed	1.00	%		229		229
Marlin Covington Finance	03/11/2021	Fixed	20.17	%		—		4
Total					$	1,291	$	822

(a) Annual Insurance financing primarily for the Company’s directors and officers insurance.  

(b) Insurance financing for professional and general liability and property insurance for the Tara Facility in our Healthcare Services segment.

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(c) On August 13, 2021, we received notification that the Paycheck Protection Program Loan (“PPP Loan) was forgiven by the SBA on July 9, 2021. See Note 14 – Subsequent Events.

Debt Covenant Compliance

As of June 30, 2021, the Company had 17 credit related instruments outstanding that include various financial and administrative covenant requirements. Covenant requirements include, but are not limited to, fixed charge coverage ratios, debt service coverage ratios, minimum earnings before interest, taxes, depreciation, and amortization or earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs, and current ratios. Certain financial covenant requirements are based on consolidated financial measurements whereas others are based on measurements at the subsidiary level (i.e., facility, multiple facilities or a combination of subsidiaries).  The subsidiary level requirements are as follows: (i) financial covenants measured against subsidiaries of the Company; and (ii) financial covenants measured against third-party operator performance. Some covenants are based on annual financial metric measurements whereas others are based on monthly and quarterly financial metric measurements. The Company routinely tracks and monitors its compliance with its covenant requirements.

As of June 30, 2021, the Company was in compliance with the various financial and administrative covenants under the Company’s outstanding credit related instruments.  

Scheduled Maturities

The schedule below summarizes the scheduled gross maturities as of June 30, 2021 for each of the next five years and thereafter.

For the twelve months ended June 30,	(Amounts in 000’s)
2022	$	6,400
2023		1,726
2024		1,808
2025		1,899
2026		1,994
Thereafter		41,667
Subtotal	$	55,494
Less: unamortized discounts		(129	)
Less: deferred financing costs, net		(1,202	)
Total notes and other debt	$	54,163

NOTE 9. DISCONTINUED OPERATIONS

Discontinued Operations

For discontinued operations, cost of services, as shown below, is primarily accruals or releases of over accruals for professional and general liability claims and bad debt expense. For a historical listing and description of the Company’s discontinued entities, see Part II, Item 8, “Financial Statements and Supplementary Data”, Note 10 – Discontinued Operations included in the Annual Report.

The following table summarizes the activity of discontinued operations for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in 000’s)	2021			2020			2021			2020
Cost of services	$	62		$	(6	)	$	75		$	31
Net (loss) income	$	(62	)	$	6		$	(75	)	$	(31	)

The Company’s major classes of discontinued operation’s assets and liabilities included within the Company’s consolidated balance sheets as of June 30, 2021 and December 31, 2020 are: (i) “Accounts payable” of $2.5 million and $2.6 million; and (ii) “Accrued Expenses” of $0.7 million and $0.7 million, respectively.

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NOTE 10. COMMON AND PREFERRED STOCK

Common Stock

There were no dividends declared or paid on the common stock during the three and six months ended June 30, 2021 and 2020.

Preferred Stock

No dividends were declared or paid on the Series A Preferred Stock for the three and six months ended June 30, 2021 and 2020.

As of June 30, 2021, as a result of the suspension of the dividend payment on the Series A Preferred Stock commencing with the fourth quarter 2017 dividend period, the Company has $32.4 million of undeclared preferred stock dividends in arrears.  Holders of the Series A Preferred Stock are entitled to receive, when and as declared by the Board out of funds of the Company legally available for the payment of distributions, cumulative preferential cash dividends at an annual rate equal to 10.875% of the $25.00 per share stated liquidation preference of the Series A Preferred Stock, which is equivalent to an annual rate of $2.72 per share or $1.9 million per quarter. Dividends on the Series A Preferred Stock, when and as declared by the Board, are payable quarterly in arrears, on March 31, June 30, September 30, and December 31 of each year. On June 8, 2018, the Board determined to continue suspension of the payment of the quarterly dividend on the Series A Preferred Stock indefinitely. Under the terms of the Series A Preferred Stock, dividends on the Series A Preferred Stock shall continue to accrue and accumulate regardless of whether such dividends are declared by the Board. As the Company has failed to pay cash dividends on the outstanding Series A Preferred Stock in full for four dividends periods: (i) the annual dividend rate on the Series A Preferred Stock has increased to 12.875%, which is equivalent to an annual rate of $3.20 or $2.2 million per quarter, commencing on the first day after the missed fourth quarterly payment (October 1, 2018) continuing until the second consecutive dividend payment date following such time as the Company has paid all accumulated and unpaid dividends on the Series A Preferred Stock in full in cash; and (ii) the holders of the Series A Preferred Stock will be entitled to vote, as a single class, for the election of two additional directors to serve on the Board, as further described in the amended and restated articles of incorporation of the Company, otherwise referred to as the Charter.

As of June 30, 2021, the Company had 2,811,535 shares of the Series A Preferred Stock issued and outstanding.

The Company may, at its option, redeem the Series A Preferred Stock, in whole or in part, by paying $25.00 per share, plus any accrued and unpaid dividends to the redemption date.

For historical information regarding the Series A Preferred Stock, the Company’s former “at-the-market” offering program and prior share repurchase programs, see Part II, Item 8, “Financial Statements and Supplementary Data”, Note 11 – Common and Preferred Stock included in the Annual Report.

NOTE 11. STOCK BASED COMPENSATION

Stock Incentive Plans

On November 4, 2020, the Board adopted, subject to shareholder approval, the Regional Health Properties, Inc. 2020 Equity Incentive Plan (the “2020 Plan”). The Company’s shareholders approved the 2020 Plan on December 16, 2020 at the 2020 Annual Meeting of Shareholders of the Company. The maximum number of shares of common stock authorized for issuance under the 2020 Plan is 250,000 shares, subject to certain adjustments. No awards may be made under the 2020 Plan after the 10th anniversary of the date of shareholder approval of the 2020 Plan, and no incentive stock options may be granted after the 10th anniversary of the date of Board approval of the 2020 Plan. 

The 2020 Plan replaced the AdCare Health Systems, Inc. 2011 Stock Incentive Plan, as amended (the “2011 Plan”), which was assumed by Regional Health pursuant to the Merger. The 2011 Plan was originally due to expire on March 28, 2021 and provided for a maximum of 168,950 shares of common stock to be issued. No additional awards may be granted under the 2011 Plan, effective upon shareholder approval of the 2020 Plan.  As of June 30, 2021, the number of securities remaining available for future issuance under the 2020 Plan is 210,386.

The shares of common stock underlying any awards granted under the 2020 Plan or the 2011 Plan that are forfeited, canceled, or otherwise terminated (other than by exercise) will be added back to the shares of common stock available for issuance under the 2020 Plan. However, shares: (i) tendered or held back upon exercise of a stock option or other award under the 2020 Plan to cover the exercise price or tax withholding; and (ii) subject to a stock appreciation right that are not issued in connection with the stock settlement of the stock appreciation right upon exercise thereof, will not be added back to the shares of common stock

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available for issuance under the 2020 Plan.  In addition, shares of common stock repurchased by the Company on the open market will not be added back to the shares of common stock available for issuance under the 2020 Plan. 

For the three and six months ended June 30, 2021 and 2020, the Company recognized stock-based compensation expense as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in 000’s)	2021		2020		2021		2020
Employee compensation:
Restricted stock	$	123	$	—	$	123	$	—
Total employee stock-based compensation expense	$	123	$	—	$	123	$	—
Non-employee compensation:
Board restricted stock	$	—	$	12	$	—	$	24
Total non-employee stock-based compensation expense	$	—	$	12	$	—	$	24
Total stock-based compensation expense	$	123	$	12	$	123	$	24

For the three and six months ended June 30, 2021 and 2020, there were no issuances of common stock options or warrants.

Restricted Stock

The following table summarizes the Company’s restricted stock activity for the six months ended June 30, 2021:

	Number of Shares (000's)			Weighted Avg. Grant Date (per Share) Fair Value
Unvested, December 31, 2020		14		$	3.60
Granted		39		$	13.26
Vested		(22	)	$	7.18
Unvested, June 30, 2021		31		$	13.26

The remaining unvested shares at December 31, 2020 vested on January 1, 2021, resulting in minimal compensation expense related to the final vesting of the restricted stock awards during the three months ended March 31, 2021. For restricted stock unvested at June 30, 2021, $0.4 million in compensation expense will be recognized over the next 2.0 years.

NOTE 12. COMMITMENTS AND CONTINGENCIES

Regulatory Matters

Laws and regulations governing federal Medicare and state Medicaid programs are complex and subject to interpretation. Compliance with such laws and regulations can be subject to future governmental review and interpretation as well as significant regulatory action including fines, penalties, and exclusion from certain governmental programs. As of June 30, 2021, all of the Company’s facilities operated by Regional or leased and subleased to third-party operators and managed for third-parties are certified by CMS and are operational. See Note 6 - Leases.

Legal Matters

The Company is a party to various legal actions and administrative proceedings and is subject to various claims arising in the ordinary course of business, including claims that the services the Company provided during the time it operated SNFs resulted in injury or death to the patients of the Company’s facilities and claims related to professional and general negligence, employment, staffing requirements and commercial matters. Although the Company intends to vigorously defend itself in these matters, there is no assurance that the outcomes of these matters will not have a material adverse effect on the Company’s business, results of operations and financial condition.

The Company previously operated, and the Company and its tenants now operate, in an industry that is highly regulated. As such, in the ordinary course of business, the Company and its tenants are continuously subject to state and federal regulatory scrutiny, supervision and control. Such regulatory scrutiny often includes inquiries, investigations, examinations, audits, site visits and surveys, some of which are non-routine. In addition, the Company believes that there has been, and will continue to be, an increase in governmental investigations of long-term care providers, particularly in the area of Medicare and Medicaid false claims, as well as an increase in enforcement actions resulting from these investigations. Adverse determinations in legal proceedings or governmental investigations against or involving the Company, or its tenants, whether currently asserted or arising in the future, could have a material adverse effect on the Company’s business, results of operations and financial condition.

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Professional and General Liability Claims

Claims on behalf of the Company’s Former Patients Prior to the Transition

As of June 30, 2021, the Company is a defendant in one professional and general liability action commenced on behalf of one of our former patients who received care at one of our facilities prior to the Transition. The plaintiff in this action alleges negligence due to failure to provide adequate and competent staff resulting in injuries, pain and suffering, mental anguish and malnutrition and seeks unspecified actual and compensatory damages, and unspecified punitive damages. This action is covered by insurance, except that any punitive damages awarded would be excluded from coverage.

During the three and six months ended June 30, 2021, no professional and general liability actions related to the Company’s former patients prior to the Transition were filed against the Company.

During the three months ended March 31, 2020, the Company settled one professional and general liability action, as outlined below.

• On January 29, 2020, the Company executed a settlement, in compromise of a complaint filed in the Circuit Court of Pulaski County, in the State of Arkansas, by a former patient at one of our facilities, against the Company on May 16, 2017. The plaintiff alleged medical negligence and injury. The settlement was paid in 2020, in exchange for dismissal of the case with prejudice, in the total amount of $40,000.

Claims on behalf of the Company’s Prior or Current Tenant’s Former Patients after the Transition

As of June 30, 2021, the Company is a defendant in an aggregate of 13 additional professional and general liability actions. These 13 additional professional and general liability actions, which set forth claims relating to time periods after the Transition, were commenced on behalf of former patients of our current or prior tenants. These actions generally seek unspecified compensatory and punitive damages for former patients who were allegedly injured or died due to professional negligence or understaffing at the applicable facility operated by our tenants. These actions on behalf of former patients of our current or prior tenants all relate to events which occurred after the Company transitioned the operations of the facilities in question to a third-party operator (and of which four such actions relate to events which occurred after the Company sold such facilities) and are subject to such operators’ indemnification obligations in favor of the Company. There is no assurance that our tenants will have sufficient assets, income, access to financing and insurance coverage to enable them to satisfy their respective indemnification obligations.

During the three months ended June 30, 2021, one professional and general liability action, related to the Company’s current or former tenant’s former patients was filed against the Company. The Company was subsequently dismissed with prejudice from this action on July 6, 2021.  

During the three months ended March 31, 2021, no professional and general liability actions related to the Company’s current or former tenant’s former patients were filed against the Company.

Prior Year Summary

During the three months ended June 30, 2020, two professional and general liability actions related to the Company’s current or former tenant’s former patients were filed against the Company.

During the three months ended March 31, 2020, one professional and general liability action related to the Company’s current or former tenant’s former patients was filed against the Company.

During the three months ended June 30, 2020, one professional and general liability action was dismissed without prejudice.

As of June 30, 2020, the Company was a defendant in an aggregate of 11 professional and general liability actions, primarily commenced on behalf of one of our former patients and ten of our current or prior tenant’s former patients.

The Company established a self-insurance reserve for its professional and general liability claims, included within “Accrued expenses” on the Company’s consolidated balance sheets of $0.2 million and $0.2 million as of June 30, 2021 and December 31, 2020, respectively. Additionally, as of June 30, 2021 and December 31, 2020, $0.1 million and $0.1 million, respectively, was reserved for settlement amounts in “Accounts payable” on the Company’s consolidated balance sheets. For additional information regarding the Company’s self-insurance reserve, see Part II, Item 8, “Financial Statements and Supplementary Data”, Note 14 – Commitments and Contingencies included in the Annual Report.

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Ohio Attorney General Action. On January 15, 2020, Ohio Attorney General (the “OAG”) voluntarily dismissed with prejudice all claims pending against the Company, certain subsidiaries of the Company and certain other parties, in the action they filed on October 27, 2016, in the Court of Common Pleas, Franklin County, Ohio. The dismissed lawsuit alleged that defendants, including the Company submitted improper Medicaid claims for independent laboratory services for glucose blood tests and capillary blood draws and further alleged that defendants (i) engaged in deception, (ii) willfully received Medicaid payments to which they were not entitled or in a greater amount than that to which they were entitled, and (iii) obtained payments under the Medicaid program to which they were not entitled pursuant to their provider agreements and applicable Medicaid rules and regulations. The OAG sought, among other things, triple the amount of damages proven at trial (plus interest) and not less than $5,000 and not more than $10,000 for each deceptive claim or falsification. As previously disclosed, the Company had received a letter from the OAG in February 2014 offering to settle its claims against the defendants for improper Medicaid claims related to glucose blood tests and capillary blood draws for a payment of approximately $1.0 million, which offer the Company declined. The January 15, 2020, dismissal of the case with prejudice renders all claims against the Company moot.  

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NOTE 13. SEGMENT RESULTS

Effective January 1, 2021, pursuant to the Wellington Lease Termination, as a portfolio stabilization measure the Company commenced operating the previously subleased Tara Facility. Accordingly, the Company now has two primary reporting segments: (i) Real Estate Services, which consists of the leasing and subleasing of long-term care and senior living facilities to third-party tenants, including the Company’s management of three facilities on behalf of third-party owners; and (ii) Healthcare Services, which consists of the operation of the Tara Facility.

The Company reports segment information based on the “management approach” defined in ASC 280, Segment Reporting. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of our reportable segments.

The table below presents the results of operations for our reporting segments for the periods presented.

	Three Months Ended June 30,												Six Months Ended June 30,
	2021			2021			2021			2020			2021			2021			2021			2020
(Amounts in 000’s)	Real Estate Services			Healthcare Services			Total			Real Estate Services			Real Estate Services			Healthcare Services			Total			Real Estate Services
Revenues:
Patient care revenues	$	—		$	2,445		$	2,445		$	—		$	—		$	5,135		$	5,135		$	—
Rental revenues		3,763			—			3,763			4,293			7,844			—			7,844			8,590
Management fees		247			—			247			244			495			—			495			488
Other revenues		13			—			13			2			75			—			75			9
Total revenues		4,023			2,445			6,468			4,539			8,414			5,135			13,549			9,087
Expenses:
Patient care expense		—			2,254			2,254			—			—			4,457			4,457			—
Facility rent expense		1,342			297			1,639			1,639			2,684			595			3,279			3,279
Cost of management fees		150			—			150			174			315			—			315			325
Depreciation and amortization		649			3			652			769			1,297			5			1,302			1,545
General and administrative expense		823			122			945			714			1,722			259			1,981			1,591
Doubtful accounts expense (recovery)		—			37			37			(135	)		—			77			77			(137	)
Other operating expenses		239			4			243			297			471			4			475			521
Total expenses		3,203			2,717			5,920			3,458			6,489			5,397			11,886			7,124
Income (loss) from operations		820			(272	)		548			1,081			1,925			(262	)		1,663			1,963
Other expense (income) :
Interest expense, net		663			3			666			684			1,344			9			1,353			1,399
Other expense (income), net		323			—			323			(9	)		717			—			717			135
Total other expense (income), net		986			3			989			675			2,061			9			2,070			1,534
(Loss) income from continuing operations before income taxes		(166	)		(275	)		(441	)		406			(136	)		(271	)		(407	)		429
(Loss) income from continuing operations	$	(166	)	$	(275	)	$	(441	)	$	406		$	(136	)	$	(271	)	$	(407	)	$	429
(Loss) income from discontinued operations, net of tax		(62	)		—			(62	)		6			(75	)		—			(75	)		(31	)
Net Income (loss)	$	(228	)	$	(275	)	$	(503	)	$	412		$	(211	)	$	(271	)	$	(482	)	$	398

Total assets for the Real Estate Services segment and Healthcare Services segment were $105.7 million and $1.5 million, respectively, as of June 30, 2021.

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NOTE 14. SUBSEQUENT EVENTS

The Company has evaluated all subsequent events through the date the consolidated financial statements were issued and filed with the SEC.

On August 13, 2021, the Company received official notification from FountainHead Commercial Capital, providers of our $0.2 million PPP loan that the full $0.2 million was forgiven by the SBA on July 9, 2021.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This Quarterly Report and certain information incorporated herein by reference contain forward-looking statements and information within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This information includes assumptions made by, and information currently available to management, including statements regarding future economic performance and financial condition, liquidity and capital resources, and management’s plans and objectives. In addition, certain statements included in this Quarterly Report, in the Company’s future filings with the SEC, in press releases, and in oral and written statements made by us or with our approval, which are not statements of historical fact, are forward-looking statements. Words such as “may,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “seek,” “plan,” “project,” “continue,” “predict,” “will,” and other words or expressions of similar meaning are intended by us to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are based on the Company’s current expectations about future events or results and information that is currently available to us, involve assumptions, risks, and uncertainties, and speak only as of the date on which such statements are made.

All forward-looking statements are subject to the risks and uncertainties inherent in predicting the future. The Company’s actual results may differ materially from those projected, stated or implied in these forward-looking statements as a result of many factors, including the Company’s critical accounting policies and risks and uncertainties related to, but not limited to, the operating results of the Company’s tenants, the overall industry environment, the Company’s financial condition, and the impact of the COVID-19 pandemic on the Company’s business. These and other risks and uncertainties are described in more detail in the Annual Report and in Part II, Item 1A of this Quarterly Report, as well as other reports that the Company files with the SEC.

Forward-looking statements speak only as of the date they are made and should not be relied upon as representing the Company’s views as of any subsequent date. The Company undertakes no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur, except as required by applicable laws, and you are urged to review and consider disclosures that the Company makes in this Quarterly Report and other reports that the Company files with the SEC that discuss factors germane to the Company’s business.

Overview

Regional Health, through its subsidiaries, is a self-managed real estate investment company that invests primarily in real estate purposed for long-term care and senior living.  Our business primarily consists of leasing and subleasing healthcare facilities to third-party tenants. As of June 30, 2021, the Company owned, leased or managed for third parties, or operated, 24 facilities, primarily in the Southeastern United States. Of the 24 facilities, the Company: (i) leased 10 skilled nursing facilities (which the Company owns) to third-party tenants, subleased eight skilled nursing facilities (which the Company leases) to third-party tenants, and operated, as of January 1, 2021 as a portfolio stabilization measure, one previously subleased skilled nursing facility (which the Company leases); (ii) leased two assisted living facilities (which the Company owns) to third-party tenants; and (iii) managed, on behalf of third-party owners, two skilled nursing facilities and one independent living facility. Accordingly, as of January 1, 2021, the Company has two primary reporting segments, Real Estate Services and Healthcare Services.

Effective January 1, 2021, pursuant to the Wellington Lease Termination for two skilled nursing facilities (“SNFs”) located in Georgia with affiliates of Wellington, the Company as a portfolio stabilization measure commenced operating the previously subleased Tara Facility and entered into a new sublease agreement with an affiliate of Empire for the Powder Springs Facility. The Company has entered into the Vero Management Agreement with Vero Health under which Vero Health provides management consulting services for the Tara Facility, which the Company now operates. See Note 6 – Leases, herein, and Note 6 – Leases in Part II, Item 8, “Financial Statements and Supplemental Data” in the Company’s Annual Report, for a more detailed description of the Company’s leases.

The operators of the Company’s facilities provide a range of health care and related services to patients and residents, including skilled nursing and assisted living services, social services, various therapy services, and other rehabilitative and healthcare services for both long-term and short-stay patients and residents.

Risks and Uncertainties

While the Company is a self-managed real estate investment company that invests primarily in real estate purposed for long-term care and senior living, the Company, when business conditions require, may undertake portfolio stabilization measures, such as operating a previously leased facility. On January 1, 2021, following the Wellington Transition, the Company

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commenced operating the Tara Facility, which facility comprises approximately 5.0% of the total amount of the Company’s licensed patient beds. This portfolio stabilization measure exposes the Company directly to all the risks our tenants face as discussed in this “Risk and Uncertainties” section.

On March 11, 2020, the World Health Organization declared the outbreak of the respiratory illness caused by a novel strain of coronavirus, SARS-CoV-2, also known as COVID-19, a global pandemic. The COVID-19 pandemic has led governments and other authorities in the United States to impose measures intended to control its spread, including restrictions on freedom of movement and business operations such as travel bans, border closings, business closures, quarantines and shelter-in-place orders. The COVID-19 pandemic and the measures to protect its spread have adversely affected our business during the six months ended June 30, 2021, and we expect it will continue to adversely affect our business in the quarter ending September 30, 2021 and beyond, for a variety of reasons, including those discussed below and elsewhere in this Quarterly Report.

As of August 13, 2021, the Company is aware that each of our facilities has reported one or more positive cases of COVID-19 among the residents and/or operator employee populations. Many of our operators have reported incurring significant cost increases as a result of the COVID-19 pandemic, with dramatic increases for facilities with positive cases. We believe these increases primarily stem from elevated labor costs, including increased use of overtime and bonus pay, as well as a significant increase in both the cost and usage of personal protective equipment, testing equipment, processes and supplies. In terms of occupancy levels, many of our operators have reported experiencing declines, in part due to the elimination or suspension of elective hospital procedures, fewer discharges from hospitals to SNFs, and higher hospital re-admittances from SNFs.

The COVID-19 pandemic may also lead to temporary closures of nursing facilities, operated by our tenants, which also may affect our tenants’ ability to make their rental payments to us pursuant to their respective lease agreements. In addition, our tenants’ operations could be further disrupted if any of their employees, or the employees of their vendors, have, or are suspected of having, COVID-19. This could cause, and in some cases has already caused, our tenants or their vendors to experience staffing shortages, and this could potentially require our tenants and their vendors to close parts of or entire facilities, distribution centers, or other buildings to disinfect any affected areas.

We could also be adversely affected if government authorities impose upon our tenants, or their vendors, certain restrictions due to the COVID-19 pandemic. These restrictions may be in the form of mandatory closures, requested voluntary closures, bans on new admissions, restricted operations, or restrictions on the importation of necessary equipment or supplies which may adversely affect our tenants’ operations and their ability to make rental payments to us moving forward. In addition, family members may elect to keep nursing facility residents at home during the COVID-19 pandemic, thus reducing our tenants’ revenue. Currently, a number of our tenants have stopped admitting new patients due to rising COVID-19 infections, which has resulted in decreased revenues.

As a result of the COVID-19 pandemic, our tenants may face lawsuits for alleged negligence associated with their responses to the emergency. The costs associated with defending, settling, or paying damages from such claims could negatively impact our tenants’ operating budgets and affect their ability to meet their obligations under our leases. Further, we may be subject to increased lawsuits arising out of our alleged actions or the alleged actions of our tenants for which they have agreed to indemnify, defend and hold us harmless. An unfavorable resolution of any such pending or future litigation could materially adversely affect us. The Company is not aware of any such lawsuits against our tenants.

If our tenants are unable to make rental payments to us pursuant to their lease obligations, whether due to the tenants’ decrease in revenues or otherwise, then, in some cases, we may be forced to either attempt to replace the tenants or restructure the tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to us as those currently in place.

While the Company has received approximately 97% of its expected fixed monthly rental receipts from tenants for the three and six months ended June 30, 2021, there are a number of uncertainties the Company faces as it considers the potential impact of COVID-19 on its business, including the length of census disruption, elevated COVID-19 operating costs related to personal protection equipment, cleaning supplies, virus testing and increased overtime due to staff illness and the extent to which federal and state funding support will offset these incremental costs for our tenants. To the extent government support is not sufficient or timely to offset these impacts, or to the extent these trends continue or accelerate and are not offset by additional government relief that is sufficient or timely, the operating results of our operators are likely to be adversely affected, and some may be unwilling or unable to pay their contractual obligations to us in full or on a timely basis, as has occurred with one of our prior operators.

We also do not know the number of facilities that will ultimately experience widespread, high-cost outbreaks of COVID-19. While we have requested reporting case numbers from our operators and CMS has required additional reporting by operators, we may not receive accurate information on the number of cases, which could result in a delay in reporting. We expect to see continued increased clinical protocols for infection control within facilities and increased monitoring of employees, guests and

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other individuals entering facilities; however, we do not yet know if future reimbursement rates will be sufficient to cover the increased costs of enhanced infection control and monitoring. The extent of the COVID-19 pandemic’s effect on our and our operators’ operational and financial performance will depend on future developments, including the ultimate duration, spread and intensity of the outbreak, which may depend on factors such as the development and implementation of an effective vaccine and treatments for COVID-19, government funds and other support for the senior care sector and the efficacy of other policies and measures that may mitigate the impact of the pandemic, all of which are uncertain and difficult to predict. Due to these uncertainties, we are unable at this time to estimate the effect of these factors on our business, but the adverse impact on our business, results of operations, financial condition and cash flows could be material.

Portfolio

The following table provides summary information regarding the number of facilities and related licensed beds/units as of June 30, 2021:

	Owned				Leased				Leased Operating				Managed for Third Parties				Total
	Facilities		Beds/Units		Facilities		Beds/Units		Facilities		Beds/Units		Facilities		Beds/Units		Facilities		Beds/Units
State
Alabama		2		230		—		—		—		—		—		—		2		230
Georgia		3		395		7		750		1		134		—		—		11		1,279
North Carolina		1		106		—		—		—		—		—		—		1		106
Ohio		4		291		1		99		—		—		3		332		8		722
South Carolina		2		180		—		—		—		—		—		—		2		180
Total		12		1,202		8		849		1		134		3		332		24		2,517
Facility Type
Skilled Nursing		10		1,016		8		849		1		134		2		249		21		2,248
Assisted Living		2		186		—		—		—		—		—		—		2		186
Independent Living		—		—		—		—		—		—		1		83		1		83
Total		12		1,202		8		849		1		134		3		332		24		2,517

The following table provides summary information regarding the number of facilities and related licensed beds/units by operator affiliation as of June 30 2021:

Operator Affiliation	Number of Facilities (1)		Beds / Units
C.R. Management		6		689
Aspire		5		390
Peach Health Group		3		266
Symmetry Healthcare		2		180
Beacon Health Management		2		212
Vero Health Management		1		106
Empire (2)		1		208
Subtotal		20		2,051
Regional Health Managed		3		332
Regional Health Operated (3)		1		134
Total		24		2,517

⁽¹⁾ Represents the number of facilities leased or subleased to separate tenants, of which each tenant is an affiliate of the entity named in the table above. For a more detailed discussion, see Note 6 – Leases located in Part I, Item 1, “Financial Statements”, of this Quarterly Report; Part II, Item 8, “Financial Statements and Supplementary Data”, Note 6 – Leases included in the Annual Report; and “Portfolio of Healthcare Investments” included in Part I, Item 1, “Business” included in the Annual Report.

⁽²⁾ Effective January 1, 2021, the Company entered into the PS Sublease with an affiliate of Empire for the Powder Springs Facility. See Note 6 – Leases to our consolidated financial statements in Part I, Item 1, “Financial Statements (unaudited)” in this Quarterly Report.

⁽³⁾ Effective January 1, 2021, Regional began operating the Tara Facility and entered into the Vero Management Agreement with Vero Health under which Vero Health provides management consulting services for the Tara Facility.

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Portfolio Occupancy Rates

The following table provides summary information regarding our portfolio facility-level occupancy rates for the periods shown:

	For the Twelve Months Ended
Operating Metric (1)	September 30, 2020			December 31, 2020			March 31, 2021			June 30, 2021
Occupancy (%)		73.2	%		67.3	%		68.6	%		67.7	%

⁽¹⁾ Excludes three managed facilities in Ohio.

Lease Expiration

The following table provides summary information regarding our lease expirations for the years shown as of June 30, 2021:

			Licensed Beds					Annual Lease Revenue (1)
	Number of Facilities		Amount		Percent (%)			Amount '000's		Percent (%)
2023		1		62		3.0	%	$	263		1.9	%
2024		1		126		6.1	%		965		6.8	%
2025		2		269		13.1	%		2,219		15.6	%
2026		—		—		0.0	%		—		0.0	%
2027		7		750		36.6	%		5,241		36.9	%
2028		4		328		16.0	%		2,352		16.6	%
2029		1		106		5.2	%		538		3.8	%
Thereafter		4		410		20.0	%		2,603		18.4	%
Total		20		2,051		100.0	%	$	14,181		100.0	%

⁽¹⁾ Straight-line rent.

Acquisitions and Divestitures

There were no acquisitions or divestitures during the three and six months ended June 30, 2021 or June 30, 2020.

For historical information regarding the Company’s acquisitions and divestitures, see Part II, Item 8, “Financial Statements and Supplementary Data”, Note 9 – Acquisitions and Dispositions and Note 10 – Discontinued Operations included in the Annual Report.

Critical Accounting Policies

We prepare our financial statements in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Article 8 of Regulation S-X. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses. On an ongoing basis, we review our judgments and estimates, including, but not limited to, those related to doubtful accounts, income taxes, stock compensation, intangible assets and loss contingencies. We base our estimates on historical experience, business knowledge and on various other assumptions that we believe to be reasonable under the circumstances at the time. Actual results may vary from our estimates. These estimates are evaluated by management and revised as circumstances change.

For a discussion of our critical accounting policies, see Note 1 – Organization and Significant Accounting Policies to the Company's Notes to our consolidated financial statements located in Part I, Item 1, “Financial Statements (unaudited)”, of this Quarterly Report.

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Results of Operations

The following table sets forth, for the periods indicated, unaudited statement of operations items and the amounts and percentages of change of these items. The results of operations for any particular period are not necessarily indicative of results for any future period. The following data should be read in conjunction with our consolidated financial statements and the notes thereto, which are included herein.

	Three Months Ended June 30,									Six Months Ended June 30,
(Amounts in 000’s)	2021			2020			Percent Change (*)			2021			2020			Percent Change (*)
Revenues:
Patient care revenues	$	2,445		$	—		NM			$	5,135		$	—		NM
Rental revenues		3,763			4,293			(12.3	)%		7,844			8,590			(8.7	)%
Management fees		247			244			1.2	%		495			488			1.4	%
Other revenues		13			2		NM				75			9		NM
Total revenues		6,468			4,539			42.5	%		13,549			9,087			49.1	%
Expenses:
Patient care expense		2,254			—		NM				4,457			—		NM
Facility rent expense		1,639			1,639			0.0	%		3,279			3,279			0.0	%
Cost of management fees		150			174			(13.8	)%		315			325			(3.1	)%
Depreciation and amortization		652			769			(15.2	)%		1,302			1,545			(15.7	)%
General and administrative expenses		945			714			32.4	%		1,981			1,591			24.5	%
Doubtful accounts expense (recovery)		37			(135	)		(127.4	)%		77			(137	)		(156.2	)%
Other operating expenses		243			297			(18.2	)%		475			521			(8.8	)%
Total expenses		5,920			3,458			71.2	%		11,886			7,124			66.8	%
Income from operations		548			1,081			(49.3	)%		1,663			1,963			(15.3	)%
Other expense (income) :
Interest expense, net		666			684			(2.6	)%		1,353			1,399			(3.3	)%
Other expense (income), net		323			(9	)	NM				717			135		NM
Total other expense (income), net		989			675			46.5	%		2,070			1,534			34.9	%
(Loss) income from continuing operations before income taxes		(441	)		406			(208.6	)%		(407	)		429			(194.9	)%
(Loss) income from continuing operations		(441	)		406			(208.6	)%		(407	)		429			(194.9	)%
(Loss) income from discontinued operations, net of tax		(62	)		6		NM				(75	)		(31	)		141.9	%
Net (loss) income	$	(503	)	$	412			(222.1	)%	$	(482	)	$	398			(221.1	)%

* Not meaningful (“NM”).

Three Months Ended June 30, 2021 and 2020

Patient care revenues—Patient care revenues for our new Healthcare Services segment, as a result of the Company operating the Tara Facility, were $2.4 million for the three months ended June 30, 2021, which due to lower occupancy in the current year is approximately 14.2% less than the prior year financials we received from the prior Wellington affiliated operator.

Rental revenues—Rental revenue for our Real Estate Services segment, decreased by approximately $0.5 million, or 12.3%, to $3.8 million for the three months ended June 30, 2021, compared with $4.3 million for the same period in 2020. The decrease reflects approximately $0.9 million decrease in straight-line rent due to the Wellington Lease Termination, $0.5 million and $0.4 million recognized for the three months ended June 30, 2020 for the Powder Springs Facility and the Tara Facility respectively, partially off-set by $0.3 million straight-line rent and $0.1 million variable rent recognized from the Powder Springs Facility under a new sublease with an affiliate of Empire in the current period. For further information see Note 6 – Leases to our consolidated financial statements in Part I, Item 1, “Financial Statements (unaudited)” in this Quarterly Report.

Patient care expense—Patient care expense was $2.3 million for the three months ended June 30, 2021. The current year expense is due to the costs of operating the Tara Facility in our new Healthcare Services reporting segment.

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Depreciation and amortization—Depreciation and amortization for our Real Estate Services segment decreased by approximately $0.1 million, or 15.2%, to $0.7 million for the three months ended June 30, 2021, compared with $0.8 million for the same period in 2020. This decrease is mainly due to the full depreciation of certain building improvements and equipment and computer related assets.

	Three Months Ended June 30,
(Amounts in 000’s)	2021		2020		Percent Change (*)
General and administrative expenses:
Real Estate Services	$	823	$	714		15.3	%
Healthcare Services		122		—	NM
Total	$	945	$	714		32.4	%

* Not meaningful (“NM”).

General and administrative expenses— General and administrative expenses increased by approximately $0.2 million to $0.9 million for the three months ended June 30, 2021, compared with $0.7 million for the same period in 2020. The increase is driven by $0.1 million of non-cash stock compensation for the issuance of restricted share awards for employees and $0.1 million incurred per the Vero Management Agreement, in our Healthcare Services segment, which provides remuneration to Vero of 5.0% of our Patient care revenues (net of contractual allowances) to provide management consulting services for the Tara Facility.

Doubtful accounts expense (recovery)—The current year expense is a provision for doubtful accounts in our Healthcare Services segment and the prior period gain is related to the collection of amounts owed to the Company under tenant payment plans previously not considered collectible.

Other expense (income), net— Other expense (income), net increased by approximately $0.3 million, to $0.3 million, for the three months ended June 30, 2021. These expenses are related to professional and legal services to evaluate and assist with possible opportunities to improve the Company’s capital structure.

Six Months Ended June 30, 2021 and 2020

Patient care revenues—Patient care revenues for our new Healthcare Services segment, as a result of the Company operating the Tara Facility, were $5.1 million for the six months ended June 30, 2021, which due to lower occupancy in the current year is approximately 11.8% less than the prior year financials we received from the prior Wellington affiliated operator.

Rental revenues—Rental revenue for our Real Estate Services segment, decreased by approximately $0.7 million, or 8.7%, to $7.8 million for the six months ended June 30, 2021, compared with $8.6 million for the same period in 2020. The decrease reflects approximately $1.8 million decrease in straight-line rent due to the Wellington Lease Termination, $1.0 million and $0.8 million recognized for the six months ended June 30, 2020 for the Powder Springs Facility and the Tara Facility respectively, partially off-set by $0.6 million straight-line rent and $0.5 million variable rent recognized from the Powder Springs Facility under a new sublease with an affiliate of Empire in the current period. For further information see Note 6 – Leases to our consolidated financial statements in Part I, Item 1, “Financial Statements (unaudited)” in this Quarterly Report.

Other revenues—Other revenue for our Real Estate Services segment increased by approximately $0.1 million, for the six months ended June 30, 2021, compared to the same period in 2020. This increase is due to recognition of the Symmetry Payment Plan fees and interest earned on the Peach Line, which had previously been deferred due to the Peach Line’s subordination to the Peach Health Sublessees third-party Peach Working Capital Facility until its repayment in the prior year.

Patient care expense—Patient care expense was $4.5 million for the six months ended June 30, 2021. The current year expense is due to the costs of operating the Tara Facility in our new Healthcare Services reporting segment.

Depreciation and amortization—Depreciation and amortization for our Real Estate Services segment decreased by approximately $0.2 million, or 15.7%, to $1.3 million for the six months ended June 30, 2021, compared with $1.5 million for the same period in 2020. This decrease is mainly due to the full depreciation of certain building improvements and equipment and computer related assets.

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	Six Months Ended June 30,
(Amounts in 000’s)	2021		2020		Percent Change (*)
General and administrative expenses:
Real Estate Services	$	1,722	$	1,591		8.2	%
Healthcare Services		259		—	NM
Total	$	1,981	$	1,591		24.5	%

* Not meaningful (“NM”).

General and administrative expenses— General and administrative expenses increased by approximately $0.4 million, or 24.5%, to $2.0 million for the six months ended June 30, 2021, compared with $1.6 million for the same period in 2020. The increase is driven by $0.1 million of non-cash stock compensation for the issuance of restricted share awards for employee’s and approximately $0.3 million incurred per the Vero Management Agreement, in our Healthcare Services segment, which provides remuneration to Vero of 5.0% of our Patient care revenues (net of contractual allowances) to provide management consulting services for the Tara Facility.

Doubtful accounts expense (recovery)—The current year expense is a provision for doubtful accounts in our Healthcare Services segment and the prior period gain is related to the collection of amounts owed to the Company under tenant payment plans previously not considered collectible.

Other expense, net— Other expense, net increased by approximately $0.6 million, to $0.7 million, for the six months ended June 30, 2021, compared with $0.1 million for the same period in 2020. These expenses in both years are related to professional and legal services to evaluate and assist with possible opportunities to improve the Company’s capital structure.

For further information on the Tara Facility performance, see Note 13 – Segment Results to the Company’s consolidated financial statements located in Part I, Item 1, Notes to Consolidated Financial Statements”, of this Quarterly Report.

Liquidity and Capital Resources

Overview

The Company intends to pursue measures to grow its operations, streamline its cost infrastructure and otherwise increase liquidity, including: (i) refinancing or repaying debt to reduce interest costs and mandatory principal repayments, with such repayment to be funded through potentially expanding borrowing arrangements with certain lenders; (ii) increasing future lease revenue through acquisitions and investments in existing properties; (iii) modifying the terms of existing leases; (iv) replacing certain tenants who default on their lease payment terms; and (v) reducing other and general and administrative expenses.

Management anticipates access to several sources of liquidity, including cash on hand, cash flows from operations, and debt refinancing during the twelve months following the date of this filing. At June 30, 2021, the Company had $5.6 million in unrestricted cash. During the six months ended June 30, 2021, the Company generated positive cash flow from continuing operations of $2.5 million, and anticipates continued positive cash flow from operations in the future, subject to the continued uncertainty of the COVID-19 pandemic and its impact on the Company’s business, financial condition and results of operations.

As of December 31, 2020, Regional recorded an estimated allowance of $1.4 million against a rent receivable of $2.7 million from the Wellington Tenants. During the six months ended June 30, 2021, the Company collected $3.2 million pursuant to the Wellington Lease Termination (excluding $0.2 million insurance refund) and paid $1.0 million to partially satisfy the Wellington Lease Termination obligation of approximately of $1.7 million of bed taxes in arrears and $0.1 million in collection expenses. The Company provides no assurance that we will be able to collect any of the additional $1.3 million in rent arrears in excess of the net $1.4 million already collected.

During the three and six months ended June 30, 2021, the Company recognized $0.1 million and 0.5 million respectively, of variable rent for the Powder Springs Facility and, as of the date of filing this Quarterly Report, has collected all of such variable rent replacing approximately $1.0 million of cash rent previously anticipated from the Wellington Tenant. The Tara Facility operations performance during the six months ended June 30, 2021 has been sufficient to cover approximately 54% of the rent the Company is obligated to pay under its lease. For further information on the Tara Facility performance see Note 13 – Segment Results to the Company’s consolidated financial statements located in Part I, Item 1, Notes to Consolidated Financial Statements”, of this Quarterly Report.

As of June 30, 2021, the Company had $54.2 million in indebtedness, net of $1.3 million deferred financing, and unamortized discounts. The Company anticipates net principal repayments of approximately $6.4 million during the next twelve-month

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period, including approximately $0.5 million other debt on August 25, 2021 (the “KeyBank Exit Notes”), $3.6 million in senior debt, other mortgage indebtedness on May 1, 2022 (the “Meadowood Credit Facility”) and $1.4 million of routine debt service amortization, $0.8 million of current maturities of other debt (including $0.3 million related to insurance financing for the Tara Facility operations), and a $0.1 million payment of bond debt. The Company is in negotiations to extend the maturity date of the KeyBank Exit Notes and Meadowood Credit Facility.

The Company is current with all of its Notes payable and other debt as described in Note 8 – Notes Payable and Other Debt, to the Company’s Notes to our consolidated financial statements located in Part I, Item 1, “Financial Statements (unaudited)”, of this Quarterly Report. The Company has benefited from various, now expired, stimulus measures made available to it through the CARES Act enacted by Congress in response to the COVID-19 pandemic which allowed for, among other things: (i) a deferral of debt service payments on USDA loans to maturity, (ii) an allowance for debt service payments to be made out of replacement reserve accounts for HUD loans and (iii) debt service payments to be made by the SBA on all SBA loans.

In early 2020, the Company began on-going efforts to investigate alternatives to retire or refinance our outstanding debt of Series A Preferred Stock through privately negotiated transactions, open market repurchases, redemptions, exchange offers, tender offers, or otherwise.  Costs associated with these efforts have been expensed as incurred in “Other expense, net” and were $0.7 million and $0.1 million for the six months ended June 30, 2021 and June 30, 2020, respectively. 

Debt Covenant Compliance

As of June 30, 2021, the Company was in compliance with the various financial and administrative covenants under the Company’s outstanding credit related instruments.  

Series A Preferred Dividend Suspension

On June 8, 2018, the Board indefinitely suspended quarterly dividend payments with respect to the Series A Preferred Stock. As of June 30, 2021, as a result of the suspension of the dividend payment on the Series A Preferred Stock commencing with the fourth quarter 2017 dividend period, the Company has $32.4 million of undeclared preferred stock dividends in arrears. The Board believes that the dividend suspension will provide the Company with additional funds to meet, in part, its ongoing liquidity needs. As the Company has failed to pay cash dividends on the outstanding Series A Preferred Stock in full for more than four dividend periods, the annual dividend rate on the Series A Preferred Stock for the fifth and future missed dividend periods has increased to 12.875%, which is equivalent to $3.20 per share each year, commencing on the first day after the missed fourth quarterly payment (October 1, 2018) and continuing until the second consecutive dividend payment date following such time as the Company has paid all accumulated and unpaid dividends on the Series A Preferred Stock in full in cash.

Evaluation of the Company’s Ability to Continue as a Going Concern

Under the accounting guidance related to the presentation of financial statements, the Company is required to evaluate, on a quarterly basis, whether or not the Company’s current financial condition, including its sources of liquidity at the date that the consolidated financial statements are issued, will enable the Company to meet its obligations as they come due arising within one year of the date of the issuance of the Company’s consolidated financial statements and to make a determination as to whether or not it is probable, under the application of this accounting guidance, that the Company will be able to continue as a going concern. The Company’s consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In applying applicable accounting guidance, management considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows, the Company’s obligations due over the next twelve months, and the Company’s recurring business operating expenses.

The Company concludes that it is probable that the Company will be able to meet its obligations arising within one year of the date of issuance of these consolidated financial statements within the parameters set forth in the accounting guidance.

For additional information regarding the Company’s liquidity, see Note 2 – Liquidity and Note 8 – Notes Payable and other debt, to the Company’s consolidated financial statements located in Part I, Item 1, Notes to Consolidated Financial Statements”, of this Quarterly Report.

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Cash Flows

The following table presents selected data from our consolidated statements of cash flows for the periods presented:

	Six Months Ended June 30,
(Amounts in 000’s)	2021			2020
Net cash provided by operating activities - continuing operations	$	2,531		$	820
Net cash used in operating activities - discontinued operations		(144	)		(904	)
Net cash used in investing activities - continuing operations		(74	)		(157	)
Net cash used in financing activities - continuing operations		(1,206	)		(620	)
Net change in cash and restricted cash		1,107			(861	)
Cash and restricted cash at beginning of period		7,492			8,038
Cash and restricted cash, ending	$	8,599		$	7,177

Six Months Ended June 30, 2021

Net cash provided by operating activities—continuing operations for the six months ended June 30, 2021 was approximately $2.5 million, primarily due to changes in working capital, consisting of our collection of rent arrears from the Wellington Lease Termination and income from operations less noncash charges (primarily, depreciation and amortization and lease revenue in excess of cash rent received). The $1.7 million increase compared to the same period in the prior year primarily reflects the collection of $3.2 million from the Wellington Lease Termination, off-set by payment of $1.0 million of bed tax in arrears for the Powder Springs Facility, $0.1 million of other collection expenses, approximately $0.2 million additional interest payments as result of the CARES ACT interest deferrals and additional net operating outflows of $0.2 million.

Net cash used in operating activities—discontinued operations for the six months ended June 30, 2021 was approximately $0.1 million, excluding non-cash proceeds and payments. This amount was to fund legal and associated settlement costs related to our legacy professional and general liability claims and expenses related to and payment of legacy accounts payable.

Net cash used in investing activities—continuing operations for the six months ended June 30, 2021 was approximately $0.1 million. This capital expenditure was for computer hardware, software and furniture and fixtures for the Tara Facility.

Net cash used in financing activities—continuing operations was approximately $1.2 million for the six months ended June 30, 2021. This is the result of routine repayments of approximately $0.7 million towards our senior debt obligations, $0.1 million repayment of the City of Springfield, Ohio First Mortgage Revenue Series 2012 B Bonds and $0.4 million toward our current insurance funding of other debt for the Tara Facility and our directors and officers insurance.

Six Months Ended June 30, 2020

Net cash provided by operating activities—continuing operations for the six months ended June 30, 2020 was approximately $0.8 million, consisting primarily of our income from operations less changes in working capital, and noncash charges (primarily, depreciation and amortization, and lease revenue in excess of cash received).

Net cash used in operating activities—discontinued operations for the six months ended June 30, 2020 was approximately $0.9 million, excluding non-cash proceeds and payments. This amount was to fund legal and associated settlement costs related to our legacy professional and general liability claims and payment of legacy accounts payable.

Net cash used in investing activities—continuing operations for the six months ended June 30, 2020 was approximately $0.2 million. This capital expenditure was for a new sprinkler system at one of our subleased properties.

Net cash used in financing activities—continuing operations was approximately $0.6 million for the six months ended June 30, 2020. This is the result of routine repayments of approximately $0.8 million towards our debt obligations partially off-set by receipt of $0.2 million proceeds from the PPP Loan.

Notes Payable and Other Debt

For information regarding the Company’s debt financings, see Note 8 – Notes Payable and Other Debt, to the Company’s Notes to our consolidated financial statements located in Part I, Item 1, “Financial Statements (unaudited)”, of this Quarterly Report and Note 8 – Notes Payable and Other Debt to our audited consolidated financial statements included in Part II, Item 8., “Financial Statements and Supplementary Data” in the Annual Report.

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Receivables

Our operations could be adversely affected if we experience further significant delays in receipt of rental income from our tenants.

As of June 30, 2021 and December 31, 2020, the Company reserved for approximately $0.1 million and $1.4 million, respectively, of uncollected receivables. Accounts receivable, net, totaled $1.6 million at June 30, 2021 and $2.1 million at December 31, 2020.  For information regarding the Company’s Receivables, see Note 1 – Organization and Significant Accounting Policies, to the Company’s Notes to our consolidated financial statements located in Part I, Item 1, “Financial Statements (unaudited)”, of this Quarterly Report

Operating Leases

For information regarding the Company’s operating leases, see Note 6 – Leases, to the Company’s Notes to consolidated financial statements located in Part I, Item 1, “Financial Statements (unaudited)”, of this Quarterly Report, and Note 6 – Leases located in Part II, Item 8, “Financial Statements and Supplementary Data”, included in the Annual Report.

Off-Balance Sheet Arrangements

Guarantee

On November 30, 2018, the Company subleased five facilities located in Ohio to the Aspire Sublessees, formerly affiliated with MSTC Development Inc., pursuant to the Aspire Subleases, whereby the Aspire Sublessees took possession of, and commenced operating, the Aspire Facilities as subtenant. The Aspire Subleases became effective on December 1, 2018 and are structured as triple net leases. The Company agreed to indemnify Aspire against any and all liabilities imposed on them as arising from the former operator, capped at $8.0 million. The Company has assessed the fair value of the indemnity agreements as not material to the financial statements at June 30, 2021.

For further information see Note 6 – Leases, to the Company’s Notes to consolidated financial statements located in Part I, Item 1, “Financial Statements (unaudited)”, of this Quarterly Report, and Note 6 – Leases located in Part II, Item 8, “Financial Statements and Supplementary Data”, included in the Annual Report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Disclosure in response to Item 3. of Form 10-Q is not required to be provided by smaller reporting companies.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report (the “Evaluation Date”). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal controls over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II.  Other Information

Item 1. Legal Proceedings.

The Company is a defendant in various legal actions and administrative proceedings arising in the ordinary course of business, including claims that the services the Company provided during the time it operated skilled nursing facilities resulted in injury or death to patients. Although the Company settles cases from time to time when settlement can be achieved on a reasonable basis, the Company vigorously defends any matter in which it believes the claims lack merit and the Company has a reasonable chance to prevail at trial or in arbitration. Litigation is inherently unpredictable. There is no assurance that the outcomes of these matters will not have a material adverse effect on the Company’s financial condition. Although arising in the ordinary course of the Company's business, certain of these matters are described in “Note 12 - Commitments and Contingencies – Professional and General Liability Claims” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report, which Note – 12 is incorporated herein by this reference.

The Company believes that most of the professional and general liability actions are defensible and intends to defend them through final judgment unless settlement is more advantageous to the Company. See “Risks Related to Our Business - If we are unable to resolve our professional and general liability claims on terms acceptable to us, then it could have a material adverse effect on our business, financial condition and results of operation” in Part I, Item 1A, “Risk Factors.” in the Annual Report.

As of the date of filing of this Quarterly Report, the Company is a defendant in one professional and general liability action commenced on behalf of one of our former patients who received care at one of our facilities prior to the Transition. The plaintiff in this action alleges negligence due to failure to provide adequate and competent staff resulting in injuries, pain and suffering, mental anguish and malnutrition and seeks unspecified actual and compensatory damages, and unspecified punitive damages. This action is covered by insurance, except that any punitive damages awarded would be excluded from coverage.

As of the date of filing of this Quarterly Report, the Company is a defendant in an aggregate of 12 additional professional and general liability actions. These 12 additional professional and general liability actions set forth claims relating to time periods after the Transition, were commenced on behalf of former patients of our current or prior tenants. These actions generally seek unspecified compensatory and punitive damages for former patients who were allegedly injured or died due to professional negligence or understaffing at the applicable facility operated by our tenants. These actions on behalf of former patients of our current or prior tenants all relate to events which occurred after the Company transitioned the operations of the facilities in question to a third-party operator (and of which four such actions relate to events which occurred after the Company sold such facilities) and are subject to such operators’ indemnification obligations in favor of the Company. There is no assurance that our tenants will have sufficient assets, income, and access to financing and insurance coverage to enable them to satisfy their respective indemnification obligations.

The Company established a self-insurance reserve for its professional and general liability claims, included within “Accrued expenses” on the Company’s consolidated balance sheets of $0.2 million and $0.2 million at June 30, 2021 and December 31, 2020, respectively. Additionally as of June 30, 2021 and December 31, 2020, $0.1 million and $0.1 million, respectively, was reserved for settlement amounts in “Accounts payable” on the Company’s consolidated balance sheets. For additional information regarding the Company’s self-insurance reserve, see Part II, Item 8, “Financial Statements and Supplementary Data”, Note 14 – Commitments and Contingencies included in the Annual Report.

Item 1A. Risk Factors.

For a detailed description of certain risk factors that could affect our business, operations and financial condition, see Part I, Item 1A., Risk Factors, included in the Annual Report, as supplemented and modified by the risk factors set forth below in this Item 1A. The risk factors described in the Annual Report and this Quarterly Report (collectively, the “Risk Factors”) do not describe all risks applicable to our business, and we intend it only as a summary of certain material factors. The Risk Factors should be considered in connection with evaluating the forward-looking statements contained in this Quarterly Report because the Risk Factors could cause the actual results and conditions to differ materially from those projected in forward-looking statements. If any of the risks actually occur, our business, financial condition or results of operations could be negatively affected. In that case, the trading price of the common stock and Series A Preferred Stock could decline.

While the Company is a self-managed real estate investment company that invests primarily in real estate purposed for long-term care and senior living, the Company, when business conditions require, may undertake portfolio stabilization measures, such as operating a previously leased facility. On January 1, 2021, following the Wellington Transition, the Company commenced operating the Tara Facility, which facility comprises approximately 5.0% of the total amount of the Company’s licensed patient beds. This portfolio stabilization measure exposes the Company directly to all the risks our tenants face as discussed in this “Risk Factors” section.

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COVID-19 Global Pandemic

The COVID-19 pandemic and measures intended to prevent its spread could have a material adverse effect on our business, results of operations, cash flows and financial condition.

On March 11, 2020, the World Health Organization declared the outbreak of the respiratory illness caused by a novel strain of coronavirus, SARS-CoV-2, also known as COVID-19, a global pandemic. The COVID-19 pandemic has led governments and other authorities in the United States to impose measures intended to control its spread, including restrictions on freedom of movement and business operations such as travel bans, border closings, business closures, quarantines and shelter-in-place orders. The COVID-19 pandemic and the measures to protect its spread have adversely affected our business in the six months ended June 30, 2021, and we expect it will continue to adversely affect our business in the quarter ending September 30, 2021 and beyond, for a variety of reasons, including those discussed below and elsewhere in this Quarterly Report.

Our tenants’ operations have been, and we expect will continue to be, materially and adversely affected by the COVID-19 pandemic due to, among other things, decreased occupancy and increased operating costs (including costs due to the implementation of additional safety protocols and procedures, purchases of personal protective equipment, increased staffing to allow facilities to adhere to social distancing and infection control protocols, and premium pay and incentive pay for the staff), which may affect our tenants’ ability to make rental payments to us pursuant to their lease agreements.

The COVID-19 pandemic may also lead to temporary closures of nursing facilities, operated by our tenants, which also may affect our tenants’ ability to make their rental payments to us pursuant to their respective lease agreements. In addition, our tenants’ operations could be further disrupted if any of their employees, or the employees of their vendors, have, or are suspected of having, COVID-19. This could cause, and in some cases has already caused, our tenants or their vendors to experience staffing shortages, and this could potentially require our tenants and their vendors to close parts of or entire facilities, distribution centers, or other buildings to disinfect any affected areas.

We could also be adversely affected if government authorities impose upon our tenants, or their vendors, certain restrictions due to the COVID-19 pandemic. These restrictions may be in the form of mandatory closures, requested voluntary closures, bans on new admissions, restricted operations, or restrictions on the importation of necessary equipment or supplies which may adversely affect our tenants’ operations and their ability to make rental payments to us moving forward. In addition, family members may elect to keep nursing facility residents at home during the COVID-19 pandemic, thus reducing our tenants’ revenue. Currently, a number of our tenants have stopped admitting new patients due to rising COVID-19 infections, which has resulted in decreased revenues.

As a result of the COVID-19 pandemic, our tenants may face lawsuits for alleged negligence associated with their responses to the emergency. The costs associated with defending, settling, or paying damages from such claims could negatively impact our tenants’ operating budgets and affect their ability to meet their obligations under our leases. Further, we may be subject to increased lawsuits arising out of our alleged actions or the alleged actions of our tenants for which they have agreed to indemnify, defend and hold us harmless. An unfavorable resolution of any such pending or future litigation could materially adversely affect us. The Company is not aware of any such lawsuits against our tenants.

If our tenants are unable to make rental payments to us pursuant to their lease obligations, whether due to the tenants’ decrease in revenues or otherwise, then, in some cases, we may be forced to either attempt to replace tenants or restructure tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to us as those currently in place.

While the Company has received approximately 97% of its anticipated monthly rental receipts from tenants for the six months ended June 30, 2021, there are a number of uncertainties the Company faces as it considers the potential impact of COVID-19 on its business, including the length of census disruption, elevated COVID-19 operating costs related to personal protection equipment, cleaning supplies, virus testing and increased overtime due to staff illness and the extent to which federal and state funding support will offset these incremental costs for our tenants. To the extent government support is not sufficient or timely to offset these impacts, or to the extent these trends continue or accelerate and are not offset by additional government relief that is sufficient or timely, the operating results of our operators are likely to be adversely affected, and some may be unwilling or unable to pay their contractual obligations to us in full or on a timely basis, as has occurred with one of our prior operators.

We also do not know the number of facilities that will ultimately experience widespread, high-cost outbreaks of COVID-19. While we have requested reporting from operators of their numbers of cases and the U.S. Department of Health and CMS has required additional reporting by operators, we may not receive accurate information on the number of cases, which could result in a delay in reporting. We expect to see continued increased clinical protocols for infection control within facilities and increased monitoring of employees, guests and other individuals entering facilities; however, we do not yet know if future reimbursement rates will be sufficient to cover the increased costs of enhanced infection control and monitoring. The extent of the COVID-19 pandemic’s effect on our and our operators’ operational and financial performance will depend on future developments, including the ultimate duration, spread and intensity of the outbreak, which may depend on factors such as the development and implementation of an effective vaccine and treatments for COVID-19, government funds and other support

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for the senior care sector and the efficacy of other policies and measures that may mitigate the impact of the pandemic, all of which are uncertain and difficult to predict. Due to these uncertainties, we are not able at this time to estimate the effect of these factors on our business, but the adverse impact on our business, results of operations, financial condition and cash flows could be material.

Risks Related to Our Capital Structure

We have substantial indebtedness, which may have a material adverse effect on our business and financial condition.

As of June 30, 2021, we had approximately $54.2 million, net of $1.3 million deferred financing and unamortized discounts, in indebtedness. We may also obtain additional short-term and long-term debt to meet future capital needs, subject to certain restrictions under our existing indebtedness, which would increase our total debt. Our substantial amount of debt could have negative consequences to our business. For example, it could:

• increase our vulnerability to general adverse economic and industry conditions or a downturn in our business;

• require us to dedicate a substantial portion of cash flows from operations to interest and principal payments on outstanding debt, thereby limiting the availability of cash flow for dividends and other general corporate purposes;

• require us to maintain certain debt coverage and other financial ratios at specified levels, thereby reducing our financial flexibility;

• make it more difficult for us to satisfy our financial obligations;

• expose us to increases in interest rates for our variable rate debt;

• limit our ability to borrow additional funds on favorable terms, or at all, for working capital, debt service requirements, expansion of our business or other general corporate purposes;

• limit our ability to refinance all or a portion of our indebtedness on or before maturity on the same or more favorable terms, or at all;

• limit our flexibility in planning for, or reacting to, changes in our business and our industry;

• limit our ability to make acquisitions or take advantage of business opportunities as they arise;

• place us at a competitive disadvantage compared with our competitors that have less debt; and

• limit our ability to borrow additional funds, even when necessary to maintain adequate liquidity.

In addition, our ability to borrow funds in the future will depend in part on the satisfaction of the covenants in our debt agreements. If we are unable to satisfy the financial covenants contained in those agreements, or are unable to generate cash sufficient to make required debt payments, the lenders and other parties to those arrangements could accelerate the maturity of some or all of our outstanding indebtedness.

We depend on affiliates of C.R Management and Aspire for a significant portion of our revenues and any inability or unwillingness by such entities to satisfy their obligations to us could have a material adverse effect on us.

As of the date of filing this Quarterly Report, our 20 properties (excluding the one facility operated by us and three facilities that are managed by us) are operated by a total of 20 separate tenants, with each of our tenants being affiliated with one of seven local or regionally-focused operators. We refer to our tenants who are affiliated with the same operator as a group of affiliated tenants. Each of our operators operate (through a group of affiliated tenants) between one and six of our facilities, with our most material operators, C.R Management and Aspire, each operating (through a group of affiliated tenants) six and five facilities, respectively. We, therefore depend, on tenants who are affiliated with C.R Management and Aspire for a significant portion of our revenues. We give no assurance that the tenants affiliated with C.R Management and Aspire will have sufficient assets, income and access to financing to enable them to make rental payments to us or to otherwise satisfy their obligations under the applicable leases and subleases, and any inability or unwillingness by such tenants to do so could have a material adverse effect on us.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults upon Senior Securities.

The Board suspended dividend payments with respect to the Series A Preferred Stock, commencing with the fourth quarter of 2017, and determined to continue such suspension indefinitely in June 2018. No dividends were declared or paid with respect to the Series A Preferred Stock for such dividend periods. As a result of such suspension, the Company has $32.4 million of undeclared preferred stock dividends in arrears, whose annual dividend rate has increased to 12.875% commencing with the fourth quarter of 2018, with respect to the Series A Preferred Stock as of the date of filing of this Quarterly Report. See Note 10 – Common and Preferred Stock, “Preferred Stock Offerings and Dividends”, to the Company’s Notes to our consolidated financial statements located in Part I, Item 1, “Financial Statements (unaudited)”, of this Quarterly Report.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The agreements included as exhibits to this Quarterly Report are included to provide information regarding the terms of these agreements and are not intended to provide any other factual or disclosure information about the Company, its business or the other parties to these agreements. These agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:

• should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

• have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

• may apply standards of materiality in a way that is different from what may be viewed as material to investors; and

• were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time, and should not be relied upon by investors.

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EXHIBIT INDEX

Exhibit No.	Description	Method of Filing
3.1	Amended and Restated Articles of Incorporation of Regional Health Properties, Inc., effective September 21, 2017	Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K12B filed on October 10, 2017
3.2	Certificate of Merger, effective September 29, 2017	Incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K12B filed on October 10, 2017
3.3	Articles of Amendment to Amended and Restated Articles of Incorporation of Regional Health Properties, Inc., effective December 31, 2018	Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K12 filed on December 28, 2018
3.4	Amended and Restated Bylaws of Regional Health Properties, Inc., effective September 21, 2017	Incorporated by reference to Exhibit 3.3 of the Registrant’s Current Report on Form 8-K12B filed on October 10, 2017
4.1	Form of Common Stock Certificate of Regional Health Properties, Inc.	Incorporated by reference to Exhibit 4.2 of the Registrant’s Current Report on Form 8-K12B filed on October 10, 2017
4.2	Description of Regional Health Properties, Inc. Capital Stock	Incorporated by reference to Exhibit 4.2 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2018
4.3*	AdCare Health Systems, Inc. 2011 Stock Incentive Plan	Incorporated by reference to Exhibit 4.3 of the Registrant’s Registration Statement on Form S-8 (Registration No. 333-131542) filed October 27, 2011
4.4*	AdCare Health Systems, Inc. 2020 Stock Incentive Plan	Incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K filed December 17, 2020
4.5*	Form of Non-Statutory Stock Option Agreement (2011 Equity Plan)	Incorporated by reference to Exhibit 4.4 of the Registrant’s Registration Statement on Form S-8 (Registration No. 333-131542) filed October 27, 2011
4.6*	Form of Incentive Stock Option Agreement (2011 Equity Plan)	Incorporated by reference to Exhibit 4.5 of the Registrant’s Registration Statement on Form S-8 (Registration No. 333-131542) filed October 27, 2011
4.7*	Form of Restricted Common Stock Agreement –Non Employee Director (2020 Equity Plan)	Incorporated by reference to Exhibit 4.7 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021
4.8*	Form of Restricted Common Stock Agreement –Employee (2020 Equity Plan)	Incorporated by reference to Exhibit 4.8 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021
4.9	Form of Warrant to Purchase Common Stock of the Company (2011 Equity Plan)	Incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-3 (File No. 333-175541)
4.10	Warrant to Purchase 50,000 Shares of Common Stock, dated December 28, 2012, issued by AdCare Health Systems, Inc. to Strome Alpha Offshore Ltd.	Incorporated by reference to Exhibit 4.21 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2012
4.11	Form of Warrant granted to management to Purchase Shares of AdCare Health Systems, Inc. dated November 20, 2007	Incorporated by reference to Exhibit 10.23.2 of the Registrant’s Annual Report on Form 10-KSB as amended March 31, 2008

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Exhibit No.	Description	Method of Filing
4.12	Lease, dated as of January 1, 2021, by and between ADK Georgia, LLC and PS Operator, LLC.	Incorporated by reference to Exhibit 10.245 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020
4.13	Management Consulting Services Agreement, dated as of January 1, 2021 by and between Vero Health Management, LLC, and Tara Operator, LLC.	Incorporated by reference to Exhibit 10.246 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020
4.14	Agreement Regarding Leases, dated as of On December 1, 2020, by and between Regional Health Properties, Inc., and 3223 Falligant Avenue Associates, L.P., 3460 Powder Springs Road Associates, L.P., Wellington Healthcare Services II, L.P. and Mansell Court Associates LLC.	Incorporated by reference to Exhibit 10.247 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020
4.15*	Employment Agreement, dated July 1, 2021, by and among Regional Health Properties, Inc. and Brent Morrison.	Incorporated by reference to Exhibit 10.229 of the Registrant’s Amendment No. 1 to the Registration Statement on Form S-4 filed by Regional Health Properties, Inc. on July 2, 2021 (File No. 333-256667).
31.1	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act	Filed herewith
31.2	Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act	Filed herewith
32.1	Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act	Filed herewith
32.2	Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act	Filed herewith
101	The following financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, formatted in XBRL (eXtensible Business Reporting Language): (i)  Consolidated Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020; (ii) Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020 (unaudited); (iii) Consolidated Statements of Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2021 and 2020 (unaudited); (iv) Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (unaudited); and (v) the Notes to Consolidated Financial Statements (unaudited).	Filed herewith

* Identifies a management contract or compensatory plan or arrangement

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SIGNATURES

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

		REGIONAL HEALTH PROPERTIES, INC.
		(Registrant)
Date:	August 13, 2021	/s/ Brent  Morrison
		Brent Morrison
		Chief Executive Officer and Director (Principal Executive Officer)
Date:	August 13, 2021	/s/ Benjamin A. Waites
		Benjamin A. Waites
		Chief Financial Officer and Vice President (Principal Financial and Accounting Officer)

46

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Brent Morrison, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Regional Health Properties, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 13, 2021	By	/s/ Brent Morrison
		Chief Executive Officer and President

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Benjamin A. Waites, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Regional Health Properties, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 13, 2021	By	/s/ Benjamin A. Waites
		Chief Financial Officer and Vice President

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Regional Health Properties, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brent Morrison, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 13, 2021	By:	/s/ Brent Morrison
		Brent Morrison Chief Executive Officer and President

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Regional Health Properties, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Benjamin A. Waites, Chief Financial Officer and Vice President of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 13, 2021	By:	/s/ Benjamin A. Waites
		Benjamin A. Waites Chief Financial Officer and Vice President

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2021	Jul. 31, 2021
Document Information [Line Items]
Entity Registrant Name	REGIONAL HEALTH PROPERTIES, INC.
Entity Central Index Key	0001004724
Document Type	10-Q
Document Period End Date	Jun. 30, 2021
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		1,726,605
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Entity Current Reporting Status	Yes
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity File Number	001-33135
Entity Tax Identification Number	81-5166048
Entity Address, Address Line One	454 Satellite Boulevard NW
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	Suwanee
Entity Address, State or Province	GA
Entity Address, Postal Zip Code	30024
City Area Code	678
Local Phone Number	869-5116
Entity Incorporation, State or Country Code	GA
Entity Interactive Data Current	Yes
Document Quarterly Report	true
Document Transition Report	false
Common Stock
Document Information [Line Items]
Trading Symbol	RHE
Security Exchange Name	NYSEAMER
Title of 12(b) Security	Common Stock, no par value
10.875% Series A Cumulative Redeemable Preferred Stock
Document Information [Line Items]
Trading Symbol	RHE-PA
Security Exchange Name	NYSEAMER
Title of 12(b) Security	10.875% Series A Cumulative Redeemable Preferred Stock, no par value

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
ASSETS
Property and equipment, net	$ 51,355	$ 52,533
Cash	5,633	4,186
Restricted cash	2,966	3,306
Accounts receivable, net of allowance of $109 and $1,381	1,593	2,100
Prepaid expenses and other	990	328
Notes receivable	404	444
Intangible assets - bed licenses	2,471	2,471
Intangible assets - lease rights, net	146	158
Right-of-use operating lease assets	31,863	33,740
Goodwill	1,585	1,585
Lease deposits and other deposits	514	514
Straight-line rent receivable	7,643	6,660
Total assets	107,163	108,025
LIABILITIES AND EQUITY
Senior debt, net	46,636	47,275
Bonds, net	6,236	6,342
Other debt, net	1,291	822
Accounts payable	3,383	3,008
Accrued expenses	3,320	2,225
Operating lease obligation	34,040	35,884
Other liabilities	1,519	1,365
Total liabilities	96,425	96,921
Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock and additional paid-in capital, no par value; 55,000 shares authorized; 1,727 and 1,688 issued and outstanding at June 30, 2021 and December 31, 2020, respectively	62,157	62,041
Preferred stock, no par value; 5,000 shares authorized; 2,812 shares issued and outstanding, redemption amount $70,288 at June 30, 2021 and December 31, 2020	62,423	62,423
Accumulated deficit	(113,842)	(113,360)
Total stockholders’ equity	10,738	11,104
Total liabilities and stockholders’ equity	$ 107,163	$ 108,025

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Statement Of Financial Position [Abstract]
Accounts receivable, allowance	$ 109	$ 1,381
Common stock and additional paid-in capital, par value	$ 0	$ 0
Common stock and additional paid-in capital, shares authorized	55,000,000	55,000,000
Common stock and additional paid-in capital, shares issued	1,727,000	1,688,000
Common stock and additional paid-in capital, shares outstanding	1,727,000	1,688,000
Preferred stock, par value	$ 0	$ 0
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	2,812,000	2,812,000
Preferred stock, shares outstanding	2,812,000	2,812,000
Preferred stock, redemption amount	$ 70,288	$ 70,288

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenues:
Rental revenues	$ 3,763	$ 4,293	$ 7,844	$ 8,590
Total revenues	6,468	4,539	13,549	9,087
Expenses:
Patient care expense	2,254	0	4,457	0
Facility rent expense	1,639	1,639	3,279	3,279
Cost of management fees	150	174	315	325
Depreciation and amortization	652	769	1,302	1,545
General and administrative expense	945	714	1,981	1,591
Doubtful accounts expense (recovery)	37	(135)	77	(137)
Other operating expenses	243	297	475	521
Total expenses	5,920	3,458	11,886	7,124
Income from operations	548	1,081	1,663	1,963
Other expense (income) :
Interest expense, net	666	684	1,353	1,399
Other expense (income), net	323	(9)	717	135
Total other expense (income), net	989	675	2,070	1,534
(Loss) income from continuing operations before income taxes	(441)	406	(407)	429
(Loss) income from continuing operations	(441)	406	(407)	429
(Loss) income from discontinued operations, net of tax	(62)	6	(75)	(31)
Net (loss) income	(503)	412	(482)	398
Preferred stock dividends - undeclared	(2,249)	(2,249)	(4,498)	(4,498)
Net Loss attributable to Regional Health Properties, Inc. common stockholders	$ (2,752)	$ (1,837)	$ (4,980)	$ (4,100)
Net (loss) income per share of common stock attributable to Regional Health Properties, Inc.
Continuing operations, basic and diluted (in dollars per share)	$ (1.59)	$ (1.09)	$ (2.90)	$ (2.41)
Discontinued operations, basic and diluted (in dollars per share)	(0.03)	0.00	(0.04)	(0.02)
Net (loss) income per share of common stock attributable to Regional Health Properties, Inc.	$ (1.62)	$ (1.09)	$ (2.94)	$ (2.43)
Weighted average shares of common stock outstanding:
Basic and diluted (in shares)	1,697	1,688	1,692	1,688
Patient Care Revenues
Revenues:
Patient care, management fees and other revenues	$ 2,445	$ 0	$ 5,135	$ 0
Management Fees
Revenues:
Patient care, management fees and other revenues	247	244	495	488
Other Revenues
Revenues:
Patient care, management fees and other revenues	$ 13	$ 2	$ 75	$ 9

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Shares of Common Stock	Shares of Preferred Stock	Common Stock and Additional Paid-in Capital	Preferred Stock	Accumulated Deficit
Balance at Dec. 31, 2019	$ 11,743			$ 61,992	$ 62,423	$ (112,672)
Balance (in shares) at Dec. 31, 2019		1,688
Balance (in shares) at Dec. 31, 2019			2,812
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	12			12
Net income (loss)	(14)					(14)
Balance at Mar. 31, 2020	11,741			62,004	62,423	(112,686)
Balance (in shares) at Mar. 31, 2020		1,688
Balance (in shares) at Mar. 31, 2020			2,812
Balance at Dec. 31, 2019	11,743			61,992	62,423	(112,672)
Balance (in shares) at Dec. 31, 2019		1,688
Balance (in shares) at Dec. 31, 2019			2,812
Increase (Decrease) in Stockholders' Equity
Net income (loss)	398
Balance at Jun. 30, 2020	12,165			62,016	62,423	(112,274)
Balance (in shares) at Jun. 30, 2020		1,688
Balance (in shares) at Jun. 30, 2020			2,812
Balance at Mar. 31, 2020	11,741			62,004	62,423	(112,686)
Balance (in shares) at Mar. 31, 2020		1,688
Balance (in shares) at Mar. 31, 2020			2,812
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	12			12
Net income (loss)	412					412
Balance at Jun. 30, 2020	12,165			62,016	62,423	(112,274)
Balance (in shares) at Jun. 30, 2020		1,688
Balance (in shares) at Jun. 30, 2020			2,812
Balance at Dec. 31, 2020	$ 11,104			62,041	62,423	(113,360)
Balance (in shares) at Dec. 31, 2020	1,688	1,688
Balance (in shares) at Dec. 31, 2020	2,812		2,812
Increase (Decrease) in Stockholders' Equity
Net income (loss)	$ 21					21
Balance at Mar. 31, 2021	11,125			62,041	62,423	(113,339)
Balance (in shares) at Mar. 31, 2021		1,688
Balance (in shares) at Mar. 31, 2021			2,812
Balance at Dec. 31, 2020	$ 11,104			62,041	62,423	(113,360)
Balance (in shares) at Dec. 31, 2020	1,688	1,688
Balance (in shares) at Dec. 31, 2020	2,812		2,812
Increase (Decrease) in Stockholders' Equity
Net income (loss)	$ (482)
Balance at Jun. 30, 2021	$ 10,738			62,157	62,423	(113,842)
Balance (in shares) at Jun. 30, 2021	1,727	1,727
Balance (in shares) at Jun. 30, 2021	2,812		2,812
Balance at Mar. 31, 2021	$ 11,125			62,041	62,423	(113,339)
Balance (in shares) at Mar. 31, 2021		1,688
Balance (in shares) at Mar. 31, 2021			2,812
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	123			123
Stock-based compensation (in shares)		39
Exercise of restricted share awards net settlement option	(7)			(7)
Exercise of restricted share awards net settlement option (in shares)		(1)
Treasury shares, no par value (in shares)		1
Net income (loss)	(503)					(503)
Balance at Jun. 30, 2021	$ 10,738			$ 62,157	$ 62,423	$ (113,842)
Balance (in shares) at Jun. 30, 2021	1,727	1,727
Balance (in shares) at Jun. 30, 2021	2,812		2,812

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Cash flows from operating activities:
Net (Loss) income	$ (482)	$ 398
Loss from discontinued operations, net of tax	75	31
(Loss) income from continuing operations	(407)	429
Adjustments to reconcile net (loss) income from continuing operations to net cash provided by operating activities:
Depreciation and amortization	1,302	1,545
Stock-based compensation expense	123	24
Rent expense in excess of cash paid	34	109
Rent revenue in excess of cash received	(1,229)	(536)
Amortization of deferred financing costs, debt discounts and premiums	55	64
Bad debt expense (recovery)	77	(137)
Changes in operating assets and liabilities:
Accounts receivable	633	(1,078)
Prepaid expenses and other assets	244	65
Accounts payable and accrued expenses	1,544	68
Other liabilities	155	267
Net cash provided by operating activities - continuing operations	2,531	820
Net cash used in operating activities - discontinued operations	(144)	(904)
Net cash provided by (used in) operating activities	2,387	(84)
Cash flows from investing activities:
Purchase of property and equipment	(74)	(157)
Net cash used in investing activities - continuing operations	(74)	(157)
Net cash used in investing activities	(74)	(157)
Cash flows from financing activities:
Proceeds from debt issuance		229
Repayment on notes payable	(1,078)	(733)
Repayment on bonds payable	(121)	(116)
Repurchase of common stock	(7)
Net cash used in financing activities - continuing operations	(1,206)	(620)
Net cash used in financing activities	(1,206)	(620)
Net change in cash and restricted cash	1,107	(861)
Cash and restricted cash, beginning	7,492	8,038
Cash and restricted cash, ending	8,599	7,177
Supplemental disclosure of cash flow information:
Cash interest paid	1,435	1,204
Supplemental disclosure of non-cash activities:
Vendor-financed insurance	$ 867	$ 339

XML

Organization and Significant Accounting Policies

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Organization and Significant Accounting Policies

NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Regional Health Properties, Inc., a Georgia corporation (“Regional Health” or “Regional” and, together with its subsidiaries, the “Company” or “we”), is a self-managed real estate investment company that invests primarily in real estate purposed for long-term care and senior living. The Company’s business primarily consists of leasing and subleasing healthcare facilities to third-party tenants, which in turn operate the facilities. The operators of the Company’s facilities provide a range of healthcare services to their patients and residents, including skilled nursing and assisted living services, social services, various therapy services, and other rehabilitative and healthcare services for both long-term and short-stay patients and residents.

As of June 30, 2021, the Company owned, leased or managed for third parties, or operated, 24 facilities, primarily in the Southeastern United States. Of the 24 facilities, the Company: (i) leased 10 skilled nursing facilities (which the Company owns) to third-party tenants, subleased eight skilled nursing facilities (which the Company leases) to third-party tenants, and operated, as of January 1, 2021 as a portfolio stabilization measure, one previously subleased skilled nursing facility (which the Company leases); (ii) leased two assisted living facilities (which the Company owns) to third-party tenants; and (iii) managed, on behalf of third-party owners, two skilled nursing facilities and one independent living facility. Accordingly, as of January 1, 2021, the Company has two primary reporting segments: (i) real estate services, which consists of the leasing and subleasing of long-term care and senior living facilities to third-party tenants, including the Company’s management of three facilities on behalf of third-party owners (“Real Estate Services”); and (ii) healthcare services, which consists of the operation of a skilled nursing facility (“Healthcare Services”).

Effective January 1, 2021, the Company terminated the subleases for two skilled nursing facilities located in Georgia (the “Wellington Lease Termination”) with affiliates of Wellington Healthcare Services II, L.P. (“Wellington”), and as a portfolio stabilization measure, the Company commenced operating one of the facilities, a previously subleased 134-bed skilled nursing facility located in Thunderbolt, Georgia (the “Tara Facility”) and entered into a new sublease agreement with an affiliate of Empire Care Centers, LLC (“Empire”) for the other facility, a 208-bed skilled nursing facility located in Powder Springs, Georgia (the “Powder Springs Facility”). The Company has entered into a Management Consulting Services Agreement (the “Vero Management Agreement”) with Vero Health Management, LLC (“Vero Health”) under which Vero Health provides management consulting services for the Tara Facility, which the Company now operates. See Note 6 – Leases, herein, and Note 6 – Leases in Part II, Item 8, “Financial Statements and Supplemental Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (“SEC”) on March 29, 2021 (the “Annual Report”), for a more detailed description of the Company’s leases.

The Company leases its currently-owned healthcare properties, and subleases its currently-leased healthcare properties, on a triple-net basis, meaning that the lessee (i.e., the third-party operator of the property) is obligated under the lease or sublease, as applicable, for all costs of operating the property, including insurance, taxes and facility maintenance, as well as the lease or sublease payments, as applicable. These leases are generally long-term in nature with renewal options and annual rent escalation clauses.

Regional Health is successor to, and a former wholly owned subsidiary of, AdCare Health Systems, Inc. (“AdCare”). On September 29, 2017, AdCare merged (the “Merger”) with and into Regional Health, which was formed as a subsidiary of AdCare for the purpose of the Merger, with Regional Health continuing as the surviving corporation in the Merger. For a description of the Merger, see Part II, Item 8, “Financial Statements and Supplemental Data”, Note 1 – Summary of Significant Accounting Policies included in the Annual Report.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations for the periods presented have been included.  Operating results for the three and six months ended June 30, 2021 and 2020 are not necessarily indicative of the results that may be expected for the fiscal year. The consolidated balance sheet at December 31, 2020 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. 

You should read the unaudited consolidated financial statements in this Quarterly Report on Form 10-Q (this “Quarterly Report”) together with the historical audited consolidated financial statements of the Company for the year ended December 31, 2020, included in the Annual Report. See Part II, Item 8, “Financial Statements and Supplementary Data”, Note 1 – Summary of Significant Accounting Policies included in the Annual Report, for a description of all significant accounting policies. During the three and six months ended June 30, 2021, there were no material changes to the Company’s policies.

Risks and Uncertainties

While the Company is a self-managed real estate investment company that invests primarily in real estate purposed for long-term care and senior living, the Company, when business conditions require, may undertake portfolio stabilization measures, such as operating a previously leased facility. On January 1, 2021, following the Wellington Lease Termination, the Company commenced operating the Tara Facility, which facility comprises approximately 5.0% of the total amount of the Company’s licensed patient beds. This portfolio stabilization measure exposes the Company directly to all the risks our tenants face as discussed in this “Risk and Uncertainties” section and “Risks Related to Our Business - Our portfolio stabilization measures expose the Company to the various risks facing our tenants” in Part I, Item 1.A, “Risk Factors.” in the Annual Report.

On March 11, 2020, the World Health Organization declared the outbreak of the respiratory illness caused by a novel strain of coronavirus, SARS-CoV-2, also known as COVID-19, a global pandemic. The COVID-19 pandemic has led governments and other authorities in the United States to impose measures intended to control its spread, including restrictions on freedom of movement and business operations such as travel bans, border closings, business closures, quarantines and shelter-in-place orders. The COVID-19 pandemic and the measures to protect its spread have adversely affected our business during the six months ended June 30, 2021, and we expect it will continue to adversely affect our business in the quarter ending September 30, 2021 and beyond, for a variety of reasons, including those discussed below and elsewhere in this Quarterly Report.

As of August 13, 2021, the Company is aware that each of our facilities has previously reported one or more positive cases of COVID-19 among the residents and/or operator employee populations. Many of our operators have reported incurring significant cost increases as a result of the COVID-19 pandemic, with dramatic increases for facilities with positive cases. We believe these increases primarily stem from elevated labor costs, including increased use of overtime and bonus pay, as well as a significant increase in both the cost and usage of personal protective equipment, testing equipment, processes and supplies. In terms of occupancy levels, many of our operators have reported experiencing declines, in part due to the elimination or suspension of elective hospital procedures, fewer discharges from hospitals to skilled nursing facilities (“SNFs”), and higher hospital re-admittances from SNFs.

The COVID-19 pandemic may also lead to temporary closures of nursing facilities, operated by our tenants, which also may affect our tenants’ ability to make their rental payments to us pursuant to their respective lease agreements. In addition, our tenants’ operations could be further disrupted if any of their employees, or the employees of their vendors, have, or are suspected of having, COVID-19. This could cause, and in some cases has already caused, our tenants or their vendors to experience staffing shortages, and this could potentially require our tenants and their vendors to close parts of or entire facilities, distribution centers, or other buildings to disinfect any affected areas.

We could also be adversely affected if government authorities impose upon our tenants, or their vendors, certain restrictions due to the COVID-19 pandemic. These restrictions may be in the form of mandatory closures, requested voluntary closures, bans on new admissions, restricted operations, or restrictions on the importation of necessary equipment or supplies which may adversely affect our tenants’ operations and their ability to make rental payments to us moving forward. In addition, family members may elect to keep nursing facility residents at home during the COVID-19 pandemic, thus reducing our tenants’ revenue. Currently, a number of our tenants have stopped admitting new patients due to rising COVID-19 infections which has resulted in decreased revenues.

As a result of the COVID-19 pandemic, our tenants may face lawsuits for alleged negligence associated with their responses to the emergency. The costs associated with defending, settling, or paying damages from such claims could negatively impact our tenants’ operating budgets and affect their ability to meet their obligations under our leases. Further, we may be subject to increased lawsuits arising out of our alleged actions or the alleged actions of our tenants for which they have agreed to indemnify, defend and hold us harmless. An unfavorable resolution of any such pending or future litigation could materially adversely affect us. The Company is not aware of any such lawsuits against our tenants.

If our tenants are unable to make rental payments to us pursuant to their lease obligations, whether due to the tenants’ decrease in revenues or otherwise, then, in some cases, we may be forced to either attempt to replace tenants or restructure tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to us as those currently in place.

While the Company has received approximately 97% of its expected fixed monthly rental receipts from tenants for the three and six months ended June 30, 2021, there are a number of uncertainties the Company faces as it considers the potential impact of COVID-19 on its business, including the length of census disruption, elevated COVID-19 operating costs related to personal protection equipment, cleaning supplies, virus testing and increased overtime due to staff illness and the extent to which federal and state funding support will offset these incremental costs for our tenants. To the extent government support is not sufficient or timely to offset these impacts, or to the extent these trends continue or accelerate and are not offset by additional government relief that is sufficient or timely, the operating results of our operators are likely to be adversely affected, and some may be unwilling or unable to pay their contractual obligations to us in full or on a timely basis, as has occurred with one of our prior operators.

We also do not know the number of facilities that will ultimately experience widespread, high-cost outbreaks of COVID-19. While we have requested reporting case numbers from our operators and the U.S. Department of Health and Human Services Centers for Medicare and Medicaid Services (“CMS”) has required additional reporting by operators, we may not receive accurate information on the number of cases, which could result in a delay in reporting. We expect to see continued increased clinical protocols for infection control within facilities and increased monitoring of employees, guests and other individuals entering facilities; however, we do not yet know if future reimbursement rates will be sufficient to cover the increased costs of enhanced infection control and monitoring. The extent of the COVID-19 pandemic’s effect on our and our operators’ operational and financial performance will depend on future developments, including the ultimate duration, spread and intensity of the outbreak, which may depend on factors such as the development and implementation of an effective vaccine and treatments for COVID-19, government funds and other support for the senior care sector and the efficacy of other policies and measures that may mitigate the impact of the pandemic, all of which are uncertain and difficult to predict. Due to these uncertainties, we are unable at this time to estimate the effect of these factors on our business, but the adverse impact on our business, results of operations, financial condition and cash flows could be material.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

Revenue Recognition and Allowances

Patient Care Revenue. Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers requires a company to recognize revenue when the company transfers control of promised goods and services to a customer. Revenue is recognized in an amount that reflects the consideration to which a company expects to receive in exchange for such goods and services. Revenue from our new Healthcare Services business segment is derived from services rendered to patients in the Tara Facility. The Company receives payments from the following sources for services rendered in our facilities: (i) the federal government under the Medicare program administered by CMS; (ii) state governments under their respective Medicaid and similar programs; (iii) commercial insurers; and (iv) individual patients and clients. The vast majority of the revenue the Company has recognized is from government sources. The Company determines the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients and other price concessions. Contractual adjustments and discounts are based on contractual agreements, discount policies and historical experience. The Company recognizes revenue at the amount that reflects the consideration the Company expects to receive in exchange for the services provided. These amounts are due from residents or third-party payors and include variable consideration for retroactive adjustments from estimated reimbursements, if any, under reimbursement programs. Performance obligations are determined based on the nature of the services provided. Revenue is recognized as performance obligations are satisfied. Estimated uncollectable amounts due from patients are generally considered implicit price concessions that are a direct reduction to net operating revenues.

Triple-Net Leased Properties. The Company’s triple-net leases provide for periodic and determinable increases in rent. The Company recognizes rental revenues under these leases on a straight-line basis over the applicable lease term when collectability is probable. Recognizing rental income on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a straight-line rent receivable that is included in straight-line rent receivable on our consolidated balance sheets. In the event the Company cannot reasonably estimate the future collection of rent from one or more tenant(s) of the Company’s facilities, rental income for the affected facilities is recognized only upon cash collection, and any accumulated straight-line rent receivable is expensed in the period in which the Company deems rent collection to no longer be probable.

Management Fees, Revenue from Contracts with Customers. The Company recognizes management fee revenues as services are provided. The Company has one contract to manage three facilities (the “Management Contract”), with payment for each month of service received in full on a monthly basis. The maximum penalty for service contract nonperformance under the Management Contract is $50,000 per year, payable after the end of the year.

Other revenues. The Company recognizes interest income from loans and investments, using the effective interest method when collectability is probable. The Company applies the effective interest method on a loan-by-loan basis.

Allowances. The Company assesses the collectability of its rent receivables, including straight-line rent receivables and working capital loans to tenants. The Company bases its assessment of the collectability of rent receivables and working capital loans to tenants on several factors, including payment history, the financial strength of the tenant and any guarantors, the value of the underlying collateral, and current economic conditions. If the Company’s evaluation of these factors indicates it is probable that the Company will be unable to receive the rent payments or payments on a working capital loan, then the Company provides a reserve against the recognized straight-line rent receivable asset or working capital loan for the portion that we estimate may not be recovered. Payments received on impaired loans are applied against the allowance. If the Company changes its assumptions or estimates regarding the collectability of future rent payments required by a lease or required from a working capital loan to a tenant, then the Company may adjust its reserve to increase or reduce the rental revenue or interest revenue from working capital loans to tenants recognized in the period the Company makes such change in its assumptions or estimates. In an effort to ensure a conservative presentation of the results of the Healthcare Services segment due to lack of history, the Company has provided an additional allowance for patient care receivables of 1.5% of patient revenues.

As of June 30, 2021 and December 31, 2020, the Company reserved for approximately $0.1 million and $1.4 million, respectively, of uncollected receivables. Accounts receivable, net of allowance, totaled $1.6 million at June 30, 2021 and $2.1 million at December 31, 2020.

The following table presents the Company's Accounts receivable, net of allowance for the periods presented:

(Amounts in 000’s)	June 30, 2021			December 31, 2020
Gross receivables
Real Estate Services (a)	$	777		$	3,481
Healthcare Services		925			—
Sub Total		1,702			3,481
Allowance
Real Estate Services (a)		(32	)		(1,381	)
Healthcare Services		(77	)		—
Sub Total		(109	)		(1,381	)
Accounts receivable, net of allowance	$	1,593		$	2,100

(a) See Note 6– Leases for details on the impact of the Wellington Lease Termination.

Pre-Paid Expenses and Other

As of June 30, 2021 and December 31, 2020, the Company had approximately $1.0 million and $0.3 million, respectively, in pre-paid expenses and other, the $0.7 million increase is related to insurance for the Tara Facility operations, while the other amounts are predominantly for directors’ and officers’ insurance, NYSE American annual fees and mortgage insurance premiums.

Accounts Payable

The following table presents the Company's Accounts payable for the periods presented:

(Amounts in 000’s)	June 30, 2021		December 31, 2020
Accounts payable
Real Estate Services	$	3,078	$	3,008
Healthcare Services		305		—
Total Accounts payable	$	3,383	$	3,008

Other liabilities

As of June 30, 2021 and December 31, 2020, the Company had approximately $1.5 million and $1.4 million, in Other liabilities, consisting of security lease deposits and sublease improvement funds.

Other expense, net

The Company has retained professional services to evaluate and assist with possible opportunities to improve the Company’s capital structure.

Leases and Leasehold Improvements

The Company leases certain facilities and equipment in the normal course of business. At the inception of each lease, the Company performs an evaluation to determine whether the lease should be classified as an operating lease or capital lease. As of June 30, 2021, all of the Company’s leased facilities are accounted for as operating leases. For operating leases that contain scheduled rent increases, the Company records rent expense on a straight-line basis over the term of the lease. Leasehold improvements are amortized over the shorter of the useful life of the asset or the lease term.

In accordance with Accounting Standards Update (“ASU”) ASU 2016-02, Leases, as codified in ASC 842, the Company recognizes both right of use assets and lease liabilities for leases in which we lease land, real property or other equipment, having elected the practical expedient to maintain the prior operating lease classification for leases entered into prior to January 1, 2019. We assess any new contracts or modification of contracts in accordance with ASC 842 to determine the existence of a lease and its classification. We are reporting revenues and expenses for real estate taxes and insurance, where the lessee has not made those payments directly to a third-party in accordance with their respective leases with us.

The following table summarizes real estate tax recognized on our consolidated statements of operations for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in 000’s)	2021		2020		2021		2020
Rental revenues	$	98	$	119	$	231	$	245
Other operating expenses	$	98	$	119	$	231	$	245

Additionally, we expense certain leasing costs, other than leasing commissions, as they are incurred. Prior GAAP provided for the deferral and amortization of such costs over the applicable lease term. The present value of minimum lease payments was calculated on each lease, using a discount rate of 7.98% for the Company’s leases that approximated our incremental borrowing rate as of January 1, 2019, and the current lease term. See Note 6– Leases for more information on the Company’s operating leases.

Insurance

We maintain general liability, professional liability, and other insurance policies in amounts and with coverage and deductibles we believe are appropriate, based on the nature and risks of our business, historical experience, availability, and industry standards, including for the operations at the Tara Facility. Our current policies provide for deductibles for each claim and contain various exclusions from coverage. The Company has self-insured against professional and general liability claims related to its healthcare operations that were discontinued during 2014 and 2015 in connection with its transition from an owner and operator of healthcare properties to a healthcare property holding and leasing company (the “Transition”). See Part II, Item 8, “Financial Statements and Supplementary Data”, Note 14 – Commitments and Contingencies in the Annual Report for more information. The Company evaluates quarterly the adequacy of its self-insurance reserve based on a number of factors, including: (i) the number of actions pending and the relief sought; (ii) analyses provided by defense counsel, medical experts or other information which comes to light during discovery; (iii) the legal fees and other expenses anticipated to be incurred in defending the actions; (iv) the status and likely success of any mediation or settlement discussions, including estimated settlement amounts and legal fees and other expenses anticipated to be incurred in such settlement, as applicable; and (v) the venues in which the actions have been filed or will be adjudicated. The Company believes that most of the professional and general liability actions are defensible and intends to defend them through final judgment unless settlement is more advantageous to the Company. Accordingly, the self-insurance reserve reflects the Company’s estimate of settlement amounts for the pending actions, if applicable, and legal costs of settling or litigating the pending actions, as applicable. Because the self-insurance reserve is based on estimates, the amount of the self-insurance reserve may not be sufficient to cover the settlement amounts actually incurred in settling the pending actions, or the legal costs actually incurred in settling or litigating the pending actions. See Note 7 – Accrued Expenses. In addition, the Company maintains certain other insurance programs, including commercial general liability, property, casualty, directors’ and officers’ liability, crime and employment practices liability.

Earnings Per Share

Basic earnings per share is computed by dividing net income or loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the respective period. Diluted earnings per share is similar to basic earnings per share except that the net income or loss is adjusted by the impact of the weighted-average number of shares of common stock outstanding including potentially dilutive securities (such as options, warrants and non-vested common stock) when such securities are not anti-dilutive. Potentially dilutive securities from options, warrants and unvested restricted shares are calculated in accordance with the treasury stock method, which assumes that proceeds from the exercise of all options and warrants with exercise prices exceeding the average market value are used to repurchase common stock at market value. The incremental shares remaining after the proceeds are exhausted represent the potentially dilutive effect of the securities.

Securities outstanding that were excluded from the computation, because they would have been anti-dilutive were as follows:

	June 30,
(Share amounts in 000’s)	2021		2020
Stock options		13		15
Warrants - employee		49		49
Warrants - non employee		9		9
Total anti-dilutive securities		71		73

The weighted average contractual terms in years for these securities as of June 30, 2021, with no intrinsic value, are 3.0 years for the stock options and 2.5 years for the warrants.

Recently Issued Accounting Pronouncements

In July 2021, the FASB issued ASU 2021-05—Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments, which amends the lease classification requirements for lessors. Lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if the lease would have been classified as a sales-type lease or a direct financing lease and the lessor would have otherwise recognized a day-one loss. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2021-05 on its consolidated financial statements.

See Part II, Item 8, “Financial Statements and Supplementary Data”, Note 1 – Summary of Significant Accounting Policies included in the Annual Report, for a description of the other accounting pronouncements the Company is currently evaluating.

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Liquidity

3 Months Ended

Mar. 31, 2021

Liquidity [Abstract]

Liquidity

NOTE 2. LIQUIDITY

Overview

The Company intends to pursue measures to grow its operations, streamline its cost infrastructure and otherwise increase liquidity, including: (i) refinancing or repaying debt to reduce interest costs and mandatory principal repayments, with such repayment to be funded through potentially expanding borrowing arrangements with certain lenders; (ii) increasing future lease revenue through acquisitions and investments in existing properties; (iii) modifying the terms of existing leases; (iv) replacing certain tenants who default on their lease payment terms; and (v) reducing other and general and administrative expenses.

Management anticipates access to several sources of liquidity, including cash on hand, cash flows from operations, and debt refinancing during the twelve months following the date of this filing. At June 30, 2021, the Company had $5.6 million in unrestricted cash. During the six months ended June 30, 2021, the Company generated positive cash flow from continuing operations of $2.5 million and anticipates continued positive cash flow from operations in the future, subject to the continued uncertainty of the COVID-19 pandemic and its impact on the Company’s business, financial condition and results of operations.

On December 1, 2020, the Company entered into the Wellington Lease Termination with the following affiliates of Wellington,  3223 Falligant Avenue Associates, L.P. (“Tara Tenant”) and 3460 Powder Springs Road Associates, L.P. (“Powder Springs Tenant”, together with Tara Tenant, the “Wellington Tenants”). The Wellington Tenants subleased two of the Company’s eight Georgia facilities, leased under a prime lease, under agreements dated January 31, 2015, as subsequently amended (the “Wellington Subleases”). Per the Wellington Lease Termination, possession, custody, control and operation of the Tara Facility and Powder Springs Facility (the “Wellington Facilities”) transitioned from the Wellington Tenants to the Company (the “Wellington Transition”) at 12:01 a.m. on January 1, 2021 (the “Wellington Transition Date”), pursuant to the terms and

provisions of the Operations Transfer Agreements (the “OTAs”), which the Company and the Wellington Tenants entered into in connection with the Wellington Lease Termination and which included customary termination events.

The OTAs were subject to customary closing conditions and representations and warranties. The Wellington Transition was subject to the Georgia Department of Community Health’s (“DCH”) approval of the Change in Ownership Applications (the “Applications”), which were filed by Regional on December 2, 2020. On the Wellington Transition Date, the Wellington Tenants: (i) paid all cash on hand at the Wellington Facilities to Regional; (ii) transferred and assigned, to the Company, all accounts receivable previously due to the Wellington Tenants as of the Wellington Transition Date; and (iii) entered into commercially reasonable Deposit Account Control Agreements with Regional with respect to all of the Wellington Tenants’ bank accounts that receive accounts receivable remittances. Additionally, on the Wellington Transition Date, the Company became liable for certain expenses including approximately $1.7 million of bed taxes in arrears. On January 1, 2019, security agreements executed between the Company and the Wellington Tenants provided for certain of the Wellington Tenants assets as collateral to the Company in the event of any default under prior agreements with the Company (the “Security Agreements”). These Security Agreements survive the Wellington Transition and will remain in full force and effect in order to assist Regional in collecting the accounts receivable.

Scheduled rent payments under the Wellington Subleases constituted approximately 23% of the Company’s anticipated annual revenue in 2020. As of December 31, 2020, Regional recorded an estimated allowance of $1.4 million against a rent receivable of $2.7 million from the Wellington Tenants. During the six months ended June 30, 2021, the Company collected $3.2 million pursuant to the Wellington Lease Termination (excluding $0.2 million insurance refund) and paid $1.0 million to partially satisfy the Wellington Lease Termination obligation of approximately $1.7 million of bed taxes in arrears and $0.1 million in collection expenses. The Company provides no assurance that we will be able to collect any of the additional $1.3 million in rent arrears in excess of the net $1.4 million already collected.

During the three and six months ended June 30, 2021, the Company recognized $0.1 million and $0.5 million, respectively, of variable rent for the Powder Springs Facility and, as of the date of filing this Quarterly Report, has collected all of such variable rent replacing approximately $1.0 million of cash rent previously anticipated from the Wellington Tenant. The Tara Facility operations performance during the six months ended June 30, 2021 has been sufficient to cover approximately 54% the rent the Company is obligated to pay under its lease. For further information on the Tara Facility performance see Note 13 – Segment Results.

The Company is current with all of its Notes payable and other debt as described in Note 8 – Notes Payable and Other Debt. The Company has benefited from various, now expired, stimulus measures made available to it through the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted by Congress in response to the COVID-19 pandemic which allowed for, among other things: (i) a deferral of debt service payments on U.S. Department of Agriculture (“USDA”) loans to maturity; (ii) an allowance for debt service payments to be made out of replacement reserve accounts for U.S. Department of Housing and Urban Development (“HUD”) loans; and (iii) debt service payments to be made by the U.S. Small Business Administration (the “SBA”) on all SBA loans. For further information, see Note 8 – Notes Payable and Other Debt.

Series A Preferred Dividend Suspension

On June 8, 2018, the board of directors of Regional (the “Board”) indefinitely suspended quarterly dividend payments with respect to the 10.875% Series A Cumulative Redeemable Preferred Shares (the “Series A Preferred Stock”). As of June 30, 2021, as a result of the suspension of the dividend payment on the Series A Preferred Stock commencing with the fourth quarter 2017 dividend period, the Company has $32.4 million of undeclared Series A Preferred Stock dividends in arrears. The Board believes that the dividend suspension will provide the Company with additional funds to meet, in part, its ongoing liquidity needs. As the Company has failed to pay cash dividends on the outstanding Series A Preferred Stock in full for more than four dividend periods, the annual dividend rate on the Series A Preferred Stock for the fifth and future missed dividend periods has increased to 12.875%, which is equivalent to $3.20 per share each year, commencing on the first day after the missed fourth quarterly payment (October 1, 2018) and continuing until the second consecutive dividend payment date following such time as the Company has paid all accumulated and unpaid dividends on the Series A Preferred Stock in full in cash.

Debt

 As of June 30, 2021, the Company had $54.2 million in indebtedness, net of $1.3 million deferred financing, and unamortized discounts. The Company anticipates net principal repayments of approximately $6.4 million during the next twelve-month period, including approximately $0.5 million other debt on August 25, 2021 (the “KeyBank Exit Notes”), $3.6 million in senior debt, other mortgage indebtedness on May 1, 2022 (the “Meadowood Credit Facility”) and $1.4 million of routine debt service amortization, $0.8 million of current maturities of other debt (including $0.3 million related to insurance financing for the Tara Facility operations), and a $0.1 million payment of bond debt. The Company is in negotiations to extend the maturity date of the KeyBank Exit Notes and Meadowood Credit Facility.

Debt Covenant Compliance

As of June 30, 2021, the Company was in compliance with the various financial and administrative covenants under the Company’s outstanding credit-related instruments.

Evaluation of the Company’s Ability to Continue as a Going Concern

Under the accounting guidance related to the presentation of financial statements, the Company is required to evaluate, on a quarterly basis, whether or not the Company’s current financial condition, including its sources of liquidity at the date that the consolidated financial statements are issued, will enable the Company to meet its obligations as they come due arising within one year of the date of the issuance of the Company’s consolidated financial statements and to make a determination as to whether or not it is probable, under the application of this accounting guidance, that the Company will be able to continue as a going concern. The Company’s consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

In applying applicable accounting guidance, management considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows, the Company’s obligations due over the next twelve months, and the Company’s recurring business operating expenses.

The Company concludes that it is probable that the Company will be able to meet its obligations arising within one year of the date of issuance of these consolidated financial statements within the parameters set forth in the accounting guidance.

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Cash and Restricted Cash

6 Months Ended

Jun. 30, 2021

Restricted Cash And Investments [Abstract]

Cash and Restricted Cash

NOTE 3. CASH AND RESTRICTED CASH

The following presents the Company's cash and restricted cash:

(Amounts in 000’s)	June 30, 2021		December 31, 2020
Cash	$	5,633	$	4,186
Restricted cash:
Cash collateral		62		124
HUD and other replacement reserves		1,827		1,675
Escrow deposits		760		1,190
Restricted investments for debt obligations		317		317
Total restricted cash		2,966		3,306
Total cash and restricted cash	$	8,599	$	7,492

Cash collateral—In securing mortgage financing from certain lending institutions, the Company and certain of its wholly-owned subsidiaries are required to deposit cash to be held as collateral in accordance with the terms of such loan agreements.

HUD and other replacement reserves—The regulatory agreements entered into in connection with the financing secured through HUD require monthly escrow deposits for replacement and improvement of the HUD project assets.

Escrow deposits—In connection with financing secured through the Company’s lenders, several wholly-owned subsidiaries of the Company are required to make monthly escrow deposits for taxes and insurance.

Restricted cash for debt obligations—In compliance with certain financing and insurance agreements, the Company and certain wholly-owned subsidiaries of the Company are required to deposit cash held as collateral by the lender or in escrow with certain designated financial institutions.

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Property and Equipment

6 Months Ended

Jun. 30, 2021

Property Plant And Equipment [Abstract]

Property and Equipment

NOTE 4. PROPERTY AND EQUIPMENT

The following table sets forth the Company’s property and equipment:

(Amounts in 000’s)	Estimated Useful Lives (Years)		June 30, 2021			December 31, 2020
Buildings and improvements	5-40		$	65,687		$	65,629
Equipment and computer related	2-10			5,047			5,139
Land (1)		—		2,776			2,776
Construction in process		—		5			69
				73,515			73,613
Less: accumulated depreciation and amortization				(22,160	)		(21,080	)
Property and equipment, net			$	51,355		$	52,533

(1) Includes $0.1 million of land improvements with an average estimated useful remaining life of approximately 7.4 years.

The following table summarizes total depreciation and amortization expense for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in 000’s)	2021		2020		2021		2020
Depreciation	$	543	$	544	$	1,083	$	1,094
Amortization		109		225		219		451
Total depreciation and amortization expense	$	652	$	769	$	1,302	$	1,545

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Intangible Assets and Goodwill

6 Months Ended

Jun. 30, 2021

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

NOTE 5. INTANGIBLE ASSETS AND GOODWILL

Intangible assets and Goodwill consist of the following:

(Amounts in 000’s)	Bed licenses (included in property and equipment)(a)			Bed Licenses - Separable (b)		Lease Rights			Total			Goodwill (b)
Balances, December 31, 2020
Gross	$	14,276		$	2,471	$	206		$	16,953		$	1,585
Accumulated amortization		(3,754	)		—		(48	)		(3,802	)		—
Net carrying amount	$	10,522		$	2,471	$	158		$	13,151		$	1,585
Amortization expense		(207	)		—		(12	)		(219	)		—
Balances, June 30, 2021
Gross		14,276			2,471		206			16,953			1,585
Accumulated amortization		(3,961	)		—		(60	)		(4,021	)		—
Net carrying amount	$	10,315		$	2,471	$	146		$	12,932		$	1,585

(a) Non-separable bed licenses are included in property and equipment as is the related accumulated amortization expense (see Note 4 – Property and Equipment).

(b) The Company does not amortize indefinite-lived intangibles, which consist of separable bed licenses and goodwill.

The following table summarizes amortization expense for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in 000’s)	2021		2020		2021		2020
Bed licenses	$	103	$	103	$	207	$	207
Lease rights		6		122		12		244
Total amortization expense	$	109	$	225	$	219	$	451

Expected amortization expense for the year ended December 31, for all definite-lived intangibles, for each of the next five years and thereafter is as follows: 

(Amounts in 000’s)	Bed Licenses		Lease Rights
2021 (a)	$	207	$	12
2022		414		24
2023		414		23
2024		414		18
2025		414		18
Thereafter		8,452		51
Total expected amortization expense	$	10,315	$	146

(a) Estimated amortization expense for the year ending December 31, 2021, includes only amortization to be recorded after June 30, 2021.

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Leases

6 Months Ended

Jun. 30, 2021

Leases [Abstract]

Leases

NOTE 6.LEASES

Operating Leases

Facilities Leased to the Company - The Company leases nine SNFs from unaffiliated owners under non-cancelable leases, all of which have rent escalation clauses and provisions requiring payment of real estate taxes, insurance and maintenance costs by the lessee. Except for the Tara Facility, which the Company is operating, each of the SNFs that are leased by the Company are subleased to and operated by third-party tenants. The Company also leases certain office space located in Suwanee, Georgia. The weighted average remaining lease term for our nine leased facilities is approximately 6.3 years. As of June 30, 2021, the Company is in compliance with all operating lease financial covenants.

Future Minimum Lease Payments

Future minimum lease payments for the year ended December 31, for each of the next five years and thereafter is as follows:

(Amounts in 000’s)	Future rental payments		Accretion of lease liability (1)			Operating lease obligation
2021 (2)	$	3,336	$	(106	)	$	3,230
2022		6,752		(591	)		6,161
2023		6,851		(1,050	)		5,801
2024		6,958		(1,494	)		5,464
2025		7,095		(1,950	)		5,145
Thereafter		12,736		(4,497	)		8,239
Total	$	43,728	$	(9,688	)	$	34,040

(1) Weighted average discount rate 7.98%.

(2) Estimated minimum lease payments for the year ending December 31, 2021 include only payments to be paid after June 30, 2021.

For further details regarding the Company’s leases from unaffiliated owners under non-cancelable leases and which comprise the future minimum lease payments of the Company, see Part II, Item 8, “Financial Statements and Supplementary Data”, Note 6 - Leases included in the Annual Report.

Facilities Leased or Subleased by the Company -  As of June 30, 2021, the Company leased or subleased 20 facilities (12 owned by the Company and eight leased to the Company), to third-party tenants on a triple net basis, meaning that the lessee (i.e., the third-party tenant of the property) is obligated under the lease or sublease, as applicable, for all costs of operating the property, including insurance, taxes and facility maintenance, as well as the lease or sublease payments, as applicable. The weighted average remaining lease term for our facilities is approximately 6.0 years.

Empire. Following the Wellington Lease Termination, effective January 1, 2021, Regional leased the Powder Springs Facility to PS Operator LLC (“PS Operator”), an affiliate of Empire, pursuant to a sublease (the “PS Sublease”).

The PS Sublease will expire on August 1, 2027, subject to two five-year optional extensions. For the first six months, the base rent under the PS Sublease will equal the adjusted earnings before interest, tax, depreciation, amortization, and rent (“EBITDAR”) as defined in the PS Sublease, of PS Operator, to the extent derived from the Powder Springs Facility. For months seven through twenty-four, the base rent will equal 80% of the Adjusted EBITDAR (as defined in the PS Sublease); however, beginning with month thirteen, the base rent may not exceed $150,000 per month. Beginning with month twenty-five, the base rent will be $140,000 per month.

For the first three months, if Adjusted EBITDAR was less than $0, PS Operator would not have paid any base rent and the Company would have reimbursed PS Operator an amount equal to the amount by which each period’s Adjusted EBITDAR was less than $0. Beginning with the fourth month and thereafter, the PS Sublease became a “triple net” lease with PS Operator responsible for payment of all expenses in addition to rent.

During the three and six months ended June 30, 2021, the Company recognized $0.1 million and $0.5 million of variable rent respectively for the Powder Springs Facility and $0.1 million each month during the six month period ended June 30, 2021, in straight-line rent.

If the monthly average adjusted cash flows of PS Operator (as described in the PS Sublease) is less than $100,000 for any consecutive three-month period after the sixth month of the PS Sublease, then Regional may terminate the PS Sublease subject to the conditions set forth in the PS Sublease. The PS Sublease also includes customary covenants, events of default and indemnification obligations.

Sublease Termination

Wellington. Two of the Company’s eight Georgia facilities, leased under a prime lease, were subleased to affiliates of Wellington under the Wellington Subleases. The Wellington Subleases, which were due to expire August 31, 2027, related to the Tara Facility and the Powder Springs Facility.

On December 1, 2020, the Company entered into the Wellington Lease Termination with the Wellington Tenants, Wellington, as guarantor, and Mansell Court Associates LLC (“Pledgor”). Tenants, Wellington and Pledgor, together with each of their respective affiliates, shareholders, partners, members, managers, officers, directors and employees thereof, are the “Wellington Parties”.

The Wellington Transition occurred at 12:01 a.m. on January 1, 2021, pursuant to the terms and provisions of the OTAs which the Company and the Wellington Tenants entered into in connection with the Wellington Lease Termination, which included customary termination events.

The OTAs were subject to customary closing conditions and representations and warranties. The Wellington Transition was subject to DCH approval of the Applications, which were filed by Regional on December 2, 2020. On the Wellington Transition Date, the Wellington Tenants: (i) paid all cash on hand at the Wellington Facilities to Regional; (ii) transferred and assigned to the Company all accounts receivable previously due to the Wellington Tenants as of the Wellington Transition Date; and (iii) entered into commercially reasonable Deposit Account Control Agreements with Regional with respect to all of the Wellington Tenants’ bank accounts that receive accounts receivable remittances. Additionally, on the Wellington Transition Date, the Company became liable for certain expenses including approximately $1.7 million of bed taxes in arrears. The Security Agreements survive the Wellington Transition and will remain in full force and effect in order to assist Regional in collecting the accounts receivable.

As of December 31, 2020, Regional recorded an estimated allowance of $1.4 million against a rent receivable of $2.7 million from the Wellington Tenants. During the six months ended June 30, 2021, the Company collected $3.2 million pursuant to the Wellington Lease Termination (excluding $0.2 million insurance refund) and paid $1.0 million to partially satisfy the Wellington Lease Termination obligation of approximately $1.7 million of bed taxes in arrears and approximately $0.1 million in collection expenses. The Company provides no assurance that we will be able to collect any of the additional $1.3 million in rent arrears in excess of the net $1.4 million already collected. Scheduled rent payments under the Wellington Subleases constituted approximately 23% of the Company’s anticipated annual revenue in 2020.

During the three and six months ended June 30, 2021, the Company recognized $0.1 million and $0.5 million of variable rent for the Powder Springs Facility and, as of the date of filing this Quarterly Report, has collected all of such variable rent replacing approximately $1.0 million of cash rent previously anticipated for the Wellington Tenant. The Tara Facility operations performance during the six months ended June 30, 2021 has been sufficient to cover approximately 54% of the rent the Company is obligated to pay under its lease. For further information on the Tara Facility performance see Note 13 – Segment Results.

When the Wellington Transition occurred, all agreements executed prior to the Wellington Lease Termination with the Wellington Parties, other than the Security Agreements, terminated automatically. Additionally, the Wellington Parties and Regional agreed to a mutual release whereby each party releases, acquits, and forever discharges the other party from any and all charges, complaints, claims, liabilities, demands, costs, losses, debts, and expenses of any nature whatsoever (including attorneys’ fees and costs actually incurred), known or unknown, suspected or unsuspected, accrued or not accrued, whether in law or in equity, that existed from the beginning of time to the Wellington Transition Date.

Subject to provisions in the OTAs and the Wellington Lease Termination, Regional is not liable for any contractual obligations or liabilities of the Wellington Parties owed to third-parties arising prior to the Wellington Transition Date. Regional will pay and/or assume all vacation days, sick days and paid time off accruing on or before the Wellington Transition Date.

Regional has indemnified the Wellington Parties from liabilities arising from or relating to any unpaid nursing home provider fees relating in any way to the Tara Facility and Powder Springs Facility for the period prior to and/or after December 1, 2020.

Aspire. On November 30, 2018, the Company leased or subleased to affiliates of Aspire Regional Partners, Inc. (“Aspire”) management, formerly affiliated with MSTC Development Inc., five facilities located in Ohio (collectively, “Aspire Sublessees”) pursuant to separate sublease agreements (the “Aspire Subleases”), whereby the Aspire Sublessees took possession of, and commenced operating, the facilities (the “Aspire Facilities”) as tenant or subtenant. The Aspire Subleases became effective on December 1, 2018 and are structured as triple net leases. The Company agreed to indemnify Aspire against any and all liabilities imposed on them as arising from the former operator, capped at $8.0 million. The Company has assessed the fair value of the indemnity agreements as not material to the consolidated financial statements at June 30, 2021.

Symmetry. Affiliates (the “Symmetry Tenants”) of Healthcare Management, LLC (“Symmetry” or “Symmetry Healthcare”) leased the following facilities from the Company, pursuant to separate lease agreements which expire in 2030 (the “Symmetry Leases”): (i) the Company’s 106-bed, SNF located in Sylvia, North Carolina (the “Mountain Trace Facility”); (ii) the Company’s 96-bed, SNF located in Sumter, South Carolina (the “Sumter Facility”); and (iii) the Company’s 84-bed, SNF located in Georgetown, South Carolina (the “Georgetown Facility”). On June 27, 2018, the Company notified Blue Ridge of Sumter, LLC, the tenant with respect to the Sumter Facility (the “Sumter Tenant”), and Blue Ridge on the Mountain, LLC, the tenant with respect to the Mountain Trace Facility (the “Mountain Trace Tenant”), that continued breach of the payment terms of the applicable Symmetry Lease would constitute an event of default. The Symmetry Tenants had alleged that the Company was in material breach of each of the Symmetry Leases with regard to deferred maintenance and were withholding rental payments on the basis of such allegations.  

On January 28, 2019, the Company reached an agreement with the Symmetry Tenants with respect to the Symmetry Leases, pursuant to which the Symmetry Tenants agreed to a $0.8 million (including approximately $0.06 million finance fees) payment plan for the rent arrears (the “Symmetry Payment Plan”). On February 28, 2019, the Company and the Mountain Trace Tenant mutually terminated the lease with respect to the Mountain Trace Facility and operations at the facility were transferred to Vero Health X, LLC, an affiliate of Vero Health, and hereafter also referred to as Vero Health. The Symmetry Tenants paid $0.1 million of the Symmetry Payment Plan during the six months ended June 30, 2021 and $0.1 million during the six months ended June 30, 2020. In February 2021, the Symmetry Tenants completed the Symmetry Payment Plan, upon completion of which the Company recognized $0.05 million in “Other revenues” having previously recognized $0.01 million prior to the year ended December 31, 2019.

Vero Health. On February 28, 2019, the Company entered into a lease agreement (the “Vero Health Lease”) with Vero Health, providing that Vero Health would take possession of and operate the Mountain Trace Facility located in North Carolina. The Vero Health Lease became effective, upon the termination of the prior Mountain Trace Tenant mutual lease termination on March 1, 2019.  

Peach Health. In connection with a master sublease agreement that the Company entered into with affiliates of Peach Health Group, LLC (“Peach Health”) as of June 18, 2016 and amended on March 30, 2018, the Company extended a line of credit to Peach Health (the “Peach Line”), which was subordinated to a line of credit extended to Peach Health by a third-party lender (the “Peach Working Capital Facility”). On August 27, 2020, subsequent to Peach Health repaying its Peach Working Capital Facility, the Company and Peach Health modified the Peach Line to: (i) reduce the then $1.3 million outstanding balance under the Peach Line to approximately $0.5 million, in connection with which Peach Health paid to the Company $0.45 million in cash and the Company accepted $0.35 million non-cash payment in exchange for Peach Health assuming from the Company certain bed tax liabilities related to facilities their affiliates operate; (ii) extend the maturity date of the Peach Line to August 1, 2025; (iii) decrease the interest rate from 16.5% to 8% per annum; and (iv) provide that Peach Health will not pledge, hypothecate or grant any security interest in their collateral to any other party, other than their current arrangement with the SBA, without the Company’s prior written consent. The remaining balance under the Peach Line shall be paid by Peach Health to the Company in 60 equal monthly installments. During the year ended December 31, 2019, the Company suspended revenue recognition on the Peach Line interest income due pursuant to the subordination of the Peach Line to the Peach Working Capital Facility. Upon modification to the Peach Line on August 27, 2020, the Company recommenced interest income recognition.

Notes Receivable: At June 30, 2021 and December 31, 2020, approximately $0.4 million was outstanding on the Peach Line.

Future Minimum Lease Receivables

Future minimum lease receivables for the year ended of December 31, for each of the next five years and thereafter is as follows: 

	(Amounts in 000's)
2021 (a)	$	6,276
2022		13,519
2023		15,477
2024		15,299
2025		13,702
Thereafter		33,555
Total	$	97,828

(a) Estimated minimum lease receivables for the year ending December 31, 2021 include only payments scheduled to be received after June 30, 2021.

For further details regarding the Company’s leased and subleased facilities to third-party operators, including a full summary of the Company’s leases to third-parties and which comprise the future minimum lease receivables of the Company, see Part II, Item 8, “Financial Statements and Supplementary Data”, Note 6 - Leases and Note 9 – Acquisitions and Dispositions included in the Annual Report.

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Accrued Expenses

6 Months Ended

Jun. 30, 2021

Payables And Accruals [Abstract]

Accrued Expenses

NOTE 7. ACCRUED EXPENSES

Accrued expenses consist of the following:

(Amounts in 000’s)	June 30, 2021		December 31, 2020
Accrued employee benefits and payroll-related	$	541	$	218
Real estate and other taxes (1)		1,257		491
Self-insured reserve (2)		168		183
Accrued interest		284		424
Unearned rental revenue		42		41
Other accrued expenses		1,028		868
Total accrued expenses	$	3,320	$	2,225

(1) Includes approximately $0.7 million of bed taxes in arrears related to the Wellington Transition and approximately $0.3 million bed tax accrual for the six months ended June 30, 2021 for the Healthcare Services segment.

(2) The Company self-insures against professional and general liability cases incurred prior to the Transition and uses a third-party administrator and outside counsel to manage and defend the claims (see Note 12 - Commitments and Contingencies).

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Notes Payable and Other Debt

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Notes Payable and Other Debt

NOTE 8. NOTES PAYABLE AND OTHER DEBT

See Part II, Item 8, “Financial Statements and Supplementary Data”, Note 8 – Notes Payable and Other Debt included in the Annual Report for a detailed description of all the Company’s debt facilities.

Notes payable and other debt consists of the following:

(Amounts in 000’s)	June 30, 2021			December 31, 2020
Senior debt—guaranteed by HUD	$	30,646		$	31,104
Senior debt—guaranteed by USDA		13,008			13,139
Senior debt—guaranteed by SBA		615			628
Senior debt—bonds		6,379			6,500
Senior debt—other mortgage indebtedness		3,555			3,631
Other debt		1,291			822
Subtotal		55,494			55,824
Deferred financing costs		(1,202	)		(1,250	)
Unamortized discount on bonds		(129	)		(135	)
Notes payable and other debt	$	54,163		$	54,439

The following is a detailed listing of the debt facilities that comprise each of the above categories:

(Amounts in 000’s)
Facility	Lender	Maturity	Interest Rate (a)			June 30, 2021		December 31, 2020
Senior debt - guaranteed by HUD (b)
The Pavilion Care Center	Orix Real Estate Capital	12/01/2027	Fixed	4.16	%	$	925	$	986
Hearth and Care of Greenfield	Orix Real Estate Capital	08/01/2038	Fixed	4.20	%		1,883		1,920
Woodland Manor	Midland State Bank	10/01/2044	Fixed	3.75	%		4,902		4,968
Glenvue	Midland State Bank	10/01/2044	Fixed	3.75	%		7,613		7,712
Autumn Breeze	KeyBank	01/01/2045	Fixed	3.65	%		6,617		6,705
Georgetown	Midland State Bank	10/01/2046	Fixed	2.98	%		3,350		3,394
Sumter Valley	KeyBank	01/01/2047	Fixed	3.70	%		5,356		5,419
Total						$	30,646	$	31,104
Senior debt - guaranteed by USDA (c)
Coosa (d)	Metro City	09/30/2035	Prime + 1.50%	5.50	%		5,101		5,149
Mountain Trace (e)	Community B&T	12/24/2036	Prime + 1.75%	5.75	%		3,914		3,972
Southland (f)	Cadence Bank, NA	07/27/2036	Prime + 1.50%	6.00	%		3,993		4,018
Total						$	13,008	$	13,139
Senior debt - guaranteed by SBA (g)
Southland	Cadence Bank, NA	07/27/2036	Prime + 2.25%	5.50	%		615		628
Total						$	615	$	628

(a) ^{Represents cash interest rates as of June 30, 2021 as adjusted for interest rate floor limitations, if applicable. The rates exclude amortization of deferred financing costs, which range from 0.08% to 0.53% per annum.}

(b) ^{For the seven SNFs, the Company has term loans with financial institutions that are insured 100% by HUD. The loans are secured by, among other things, an assignment of all rents paid under any existing or future leases and rental agreements with respect to the underlying facility. The loans contain customary events of default, including fraud or material misrepresentations or material omission, the commencement of a forfeiture action or proceeding, failure to make required payments, and failure to perform or comply with certain agreements. Upon the occurrence of certain events of default, the lenders may, after receiving the prior written approval of HUD, terminate the loans and all amounts under the loans will become immediately due and payable. In connection with entering into each loan, the Company entered into a healthcare regulatory agreement and a promissory note, each containing customary terms and conditions. Pursuant to the CARES Act, up to three months of debt service payments for six of the credit facilities can be made from our restricted cash reserves.}

(c) ^{For the three SNFs, the Company has term loans with financial institutions that are insured 70% to 80% by the USDA. The loans have an annual renewal fee for the USDA guarantee of 0.25% of the guaranteed portion. The loans have prepayment penalties of 1% through 2021, capped at 1% for the remainder of the first 10 years of the term and 0% thereafter except Coosa (as defined below) which is 1% thereafter.}

(d) Pursuant to the CARES Act, the monthly principal and interest payments due May 1, 2020 through September 1, 2020 for the loan for that certain 124-bed SNF commonly known as Coosa, located in Glencoe, Alabama, were deferred (a part of the “USDA Payment Program”). Monthly payments that commenced on October 1, 2020 were being applied to current interest, then deferred interest until the deferred interest is paid in full on April 1, 2021. Payments have been re-amortized over the remaining term of the loan.

(e) Pursuant to the CARES Act, the monthly principal and interest payments due May 1, 2020 through August 1, 2020 for the Mountain Trace Facility loan were deferred. Monthly payments that commenced on September 1, 2020 were being applied to current interest, then deferred interest until the deferred interest was paid in full on April 1, 2021. Payments have been re-amortized over the extended term of the loan.

(f) Pursuant to the CARES Act, the monthly principal and interest payments due May 1, 2020 through October 1, 2020 for the loan for that certain 126-bed SNF commonly known as Southland, located in Dublin, Georgia, were deferred as a part of the USDA Payment Program. Monthly payments recommenced on November 1, 2020 with payments through February 2021 being applied to principal and interest. Monthly payments that commenced on March 1, 2021 are being applied to current interest, then deferred interest until the deferred interest is paid in full, payments will be re-amortized over the extended term of the loan.

(g) ^{For the one SNF, commonly known as Southland, the Company has a term loan with a financial institution, which is 75% insured by the SBA. The SBA funded two monthly debt payments during the three months ended March 31, 2021 and six payments commencing on March 1, 2020 and ending on August 1, 2020.}

(Amounts in 000’s)
Facility	Lender	Maturity	Interest Rate (a)			June 30, 2021		December 31, 2020
Senior debt - bonds
Eaglewood Bonds Series A	City of Springfield, Ohio	05/01/2042	Fixed	7.65	%	$	6,379	$	6,379
Eaglewood Bonds Series B (b)	City of Springfield, Ohio	05/01/2021	Fixed	8.50	%		—		121
Total						$	6,379	$	6,500

(a) Represents cash interest rates as of June 30, 2021. The rates exclude amortization of deferred financing of approximately 0.01% per annum.

(b) On May 3, 2021, in accordance with the terms of The City of Springfield, Ohio First Mortgage Revenue Series 2012 B Bonds, the Company fully repaid approximately $0.1 million in outstanding principal and interest.

(Amounts in 000’s)
Facility	Lender	Maturity	Interest Rate (a)			June 30, 2021		December 31, 2020
Senior debt - other mortgage indebtedness
Meadowood	Exchange Bank of Alabama	05/01/2022	Fixed	4.50	%		3,555		3,631
Total						$	3,555	$	3,631

(a) ^{Represents cash interest rates as of June 30, 2021 as adjusted for interest rate floor limitations, if applicable. The rates exclude amortization of deferred financing costs of 0.30% per annum.}

(Amounts in 000’s)
Lender	Maturity	Interest Rate			June 30, 2021		December 31, 2020
Other debt
First Insurance Funding (a)	03/01/2022	Fixed	3.63	%	$	294	$	94
Servarus Financial Inc. (b)	11/01/2021	Fixed	5.18	%		273		—
Key Bank	08/25/2021	Fixed	0.00	%		495		495
FountainHead Commercial Capital - PPP Loan (c)	04/16/2022	Fixed	1.00	%		229		229
Marlin Covington Finance	03/11/2021	Fixed	20.17	%		—		4
Total					$	1,291	$	822

(a) Annual Insurance financing primarily for the Company’s directors and officers insurance.  

(b) Insurance financing for professional and general liability and property insurance for the Tara Facility in our Healthcare Services segment.

(c) On August 13, 2021, we received notification that the Paycheck Protection Program Loan (“PPP Loan) was forgiven by the SBA on July 9, 2021. See Note 14 – Subsequent Events.

Debt Covenant Compliance

As of June 30, 2021, the Company had 17 credit related instruments outstanding that include various financial and administrative covenant requirements. Covenant requirements include, but are not limited to, fixed charge coverage ratios, debt service coverage ratios, minimum earnings before interest, taxes, depreciation, and amortization or earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs, and current ratios. Certain financial covenant requirements are based on consolidated financial measurements whereas others are based on measurements at the subsidiary level (i.e., facility, multiple facilities or a combination of subsidiaries).  The subsidiary level requirements are as follows: (i) financial covenants measured against subsidiaries of the Company; and (ii) financial covenants measured against third-party operator performance. Some covenants are based on annual financial metric measurements whereas others are based on monthly and quarterly financial metric measurements. The Company routinely tracks and monitors its compliance with its covenant requirements.

As of June 30, 2021, the Company was in compliance with the various financial and administrative covenants under the Company’s outstanding credit related instruments.  

Scheduled Maturities

The schedule below summarizes the scheduled gross maturities as of June 30, 2021 for each of the next five years and thereafter.

For the twelve months ended June 30,	(Amounts in 000’s)
2022	$	6,400
2023		1,726
2024		1,808
2025		1,899
2026		1,994
Thereafter		41,667
Subtotal	$	55,494
Less: unamortized discounts		(129	)
Less: deferred financing costs, net		(1,202	)
Total notes and other debt	$	54,163

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Discontinued Operations

6 Months Ended

Jun. 30, 2021

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

NOTE 9. DISCONTINUED OPERATIONS

Discontinued Operations

For discontinued operations, cost of services, as shown below, is primarily accruals or releases of over accruals for professional and general liability claims and bad debt expense. For a historical listing and description of the Company’s discontinued entities, see Part II, Item 8, “Financial Statements and Supplementary Data”, Note 10 – Discontinued Operations included in the Annual Report.

The following table summarizes the activity of discontinued operations for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in 000’s)	2021			2020			2021			2020
Cost of services	$	62		$	(6	)	$	75		$	31
Net (loss) income	$	(62	)	$	6		$	(75	)	$	(31	)

The Company’s major classes of discontinued operation’s assets and liabilities included within the Company’s consolidated balance sheets as of June 30, 2021 and December 31, 2020 are: (i) “Accounts payable” of $2.5 million and $2.6 million; and (ii) “Accrued Expenses” of $0.7 million and $0.7 million, respectively.

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Common and Preferred Stock

6 Months Ended

Jun. 30, 2021

Stockholders Equity Note [Abstract]

Common and Preferred Stock

NOTE 10. COMMON AND PREFERRED STOCK

Common Stock

There were no dividends declared or paid on the common stock during the three and six months ended June 30, 2021 and 2020.

Preferred Stock

No dividends were declared or paid on the Series A Preferred Stock for the three and six months ended June 30, 2021 and 2020.

As of June 30, 2021, as a result of the suspension of the dividend payment on the Series A Preferred Stock commencing with the fourth quarter 2017 dividend period, the Company has $32.4 million of undeclared preferred stock dividends in arrears.  Holders of the Series A Preferred Stock are entitled to receive, when and as declared by the Board out of funds of the Company legally available for the payment of distributions, cumulative preferential cash dividends at an annual rate equal to 10.875% of the $25.00 per share stated liquidation preference of the Series A Preferred Stock, which is equivalent to an annual rate of $2.72 per share or $1.9 million per quarter. Dividends on the Series A Preferred Stock, when and as declared by the Board, are payable quarterly in arrears, on March 31, June 30, September 30, and December 31 of each year. On June 8, 2018, the Board determined to continue suspension of the payment of the quarterly dividend on the Series A Preferred Stock indefinitely. Under the terms of the Series A Preferred Stock, dividends on the Series A Preferred Stock shall continue to accrue and accumulate regardless of whether such dividends are declared by the Board. As the Company has failed to pay cash dividends on the outstanding Series A Preferred Stock in full for four dividends periods: (i) the annual dividend rate on the Series A Preferred Stock has increased to 12.875%, which is equivalent to an annual rate of $3.20 or $2.2 million per quarter, commencing on the first day after the missed fourth quarterly payment (October 1, 2018) continuing until the second consecutive dividend payment date following such time as the Company has paid all accumulated and unpaid dividends on the Series A Preferred Stock in full in cash; and (ii) the holders of the Series A Preferred Stock will be entitled to vote, as a single class, for the election of two additional directors to serve on the Board, as further described in the amended and restated articles of incorporation of the Company, otherwise referred to as the Charter.

As of June 30, 2021, the Company had 2,811,535 shares of the Series A Preferred Stock issued and outstanding.

The Company may, at its option, redeem the Series A Preferred Stock, in whole or in part, by paying $25.00 per share, plus any accrued and unpaid dividends to the redemption date.

For historical information regarding the Series A Preferred Stock, the Company’s former “at-the-market” offering program and prior share repurchase programs, see Part II, Item 8, “Financial Statements and Supplementary Data”, Note 11 – Common and Preferred Stock included in the Annual Report.

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Stock Based Compensation

6 Months Ended

Jun. 30, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Based Compensation

NOTE 11. STOCK BASED COMPENSATION

Stock Incentive Plans

On November 4, 2020, the Board adopted, subject to shareholder approval, the Regional Health Properties, Inc. 2020 Equity Incentive Plan (the “2020 Plan”). The Company’s shareholders approved the 2020 Plan on December 16, 2020 at the 2020 Annual Meeting of Shareholders of the Company. The maximum number of shares of common stock authorized for issuance under the 2020 Plan is 250,000 shares, subject to certain adjustments. No awards may be made under the 2020 Plan after the 10th anniversary of the date of shareholder approval of the 2020 Plan, and no incentive stock options may be granted after the 10th anniversary of the date of Board approval of the 2020 Plan. 

The 2020 Plan replaced the AdCare Health Systems, Inc. 2011 Stock Incentive Plan, as amended (the “2011 Plan”), which was assumed by Regional Health pursuant to the Merger. The 2011 Plan was originally due to expire on March 28, 2021 and provided for a maximum of 168,950 shares of common stock to be issued. No additional awards may be granted under the 2011 Plan, effective upon shareholder approval of the 2020 Plan.  As of June 30, 2021, the number of securities remaining available for future issuance under the 2020 Plan is 210,386.

The shares of common stock underlying any awards granted under the 2020 Plan or the 2011 Plan that are forfeited, canceled, or otherwise terminated (other than by exercise) will be added back to the shares of common stock available for issuance under the 2020 Plan. However, shares: (i) tendered or held back upon exercise of a stock option or other award under the 2020 Plan to cover the exercise price or tax withholding; and (ii) subject to a stock appreciation right that are not issued in connection with the stock settlement of the stock appreciation right upon exercise thereof, will not be added back to the shares of common stock

available for issuance under the 2020 Plan.  In addition, shares of common stock repurchased by the Company on the open market will not be added back to the shares of common stock available for issuance under the 2020 Plan. 

For the three and six months ended June 30, 2021 and 2020, the Company recognized stock-based compensation expense as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in 000’s)	2021		2020		2021		2020
Employee compensation:
Restricted stock	$	123	$	—	$	123	$	—
Total employee stock-based compensation expense	$	123	$	—	$	123	$	—
Non-employee compensation:
Board restricted stock	$	—	$	12	$	—	$	24
Total non-employee stock-based compensation expense	$	—	$	12	$	—	$	24
Total stock-based compensation expense	$	123	$	12	$	123	$	24

For the three and six months ended June 30, 2021 and 2020, there were no issuances of common stock options or warrants.

Restricted Stock

The following table summarizes the Company’s restricted stock activity for the six months ended June 30, 2021:

	Number of Shares (000's)			Weighted Avg. Grant Date (per Share) Fair Value
Unvested, December 31, 2020		14		$	3.60
Granted		39		$	13.26
Vested		(22	)	$	7.18
Unvested, June 30, 2021		31		$	13.26

The remaining unvested shares at December 31, 2020 vested on January 1, 2021, resulting in minimal compensation expense related to the final vesting of the restricted stock awards during the three months ended March 31, 2021. For restricted stock unvested at June 30, 2021, $0.4 million in compensation expense will be recognized over the next 2.0 years.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2021

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 12. COMMITMENTS AND CONTINGENCIES

Regulatory Matters

Laws and regulations governing federal Medicare and state Medicaid programs are complex and subject to interpretation. Compliance with such laws and regulations can be subject to future governmental review and interpretation as well as significant regulatory action including fines, penalties, and exclusion from certain governmental programs. As of June 30, 2021, all of the Company’s facilities operated by Regional or leased and subleased to third-party operators and managed for third-parties are certified by CMS and are operational. See Note 6 - Leases.

Legal Matters

The Company is a party to various legal actions and administrative proceedings and is subject to various claims arising in the ordinary course of business, including claims that the services the Company provided during the time it operated SNFs resulted in injury or death to the patients of the Company’s facilities and claims related to professional and general negligence, employment, staffing requirements and commercial matters. Although the Company intends to vigorously defend itself in these matters, there is no assurance that the outcomes of these matters will not have a material adverse effect on the Company’s business, results of operations and financial condition.

The Company previously operated, and the Company and its tenants now operate, in an industry that is highly regulated. As such, in the ordinary course of business, the Company and its tenants are continuously subject to state and federal regulatory scrutiny, supervision and control. Such regulatory scrutiny often includes inquiries, investigations, examinations, audits, site visits and surveys, some of which are non-routine. In addition, the Company believes that there has been, and will continue to be, an increase in governmental investigations of long-term care providers, particularly in the area of Medicare and Medicaid false claims, as well as an increase in enforcement actions resulting from these investigations. Adverse determinations in legal proceedings or governmental investigations against or involving the Company, or its tenants, whether currently asserted or arising in the future, could have a material adverse effect on the Company’s business, results of operations and financial condition.

Professional and General Liability Claims

Claims on behalf of the Company’s Former Patients Prior to the Transition

As of June 30, 2021, the Company is a defendant in one professional and general liability action commenced on behalf of one of our former patients who received care at one of our facilities prior to the Transition. The plaintiff in this action alleges negligence due to failure to provide adequate and competent staff resulting in injuries, pain and suffering, mental anguish and malnutrition and seeks unspecified actual and compensatory damages, and unspecified punitive damages. This action is covered by insurance, except that any punitive damages awarded would be excluded from coverage.

During the three and six months ended June 30, 2021, no professional and general liability actions related to the Company’s former patients prior to the Transition were filed against the Company.

During the three months ended March 31, 2020, the Company settled one professional and general liability action, as outlined below.

• On January 29, 2020, the Company executed a settlement, in compromise of a complaint filed in the Circuit Court of Pulaski County, in the State of Arkansas, by a former patient at one of our facilities, against the Company on May 16, 2017. The plaintiff alleged medical negligence and injury. The settlement was paid in 2020, in exchange for dismissal of the case with prejudice, in the total amount of $40,000.

Claims on behalf of the Company’s Prior or Current Tenant’s Former Patients after the Transition

As of June 30, 2021, the Company is a defendant in an aggregate of 13 additional professional and general liability actions. These 13 additional professional and general liability actions, which set forth claims relating to time periods after the Transition, were commenced on behalf of former patients of our current or prior tenants. These actions generally seek unspecified compensatory and punitive damages for former patients who were allegedly injured or died due to professional negligence or understaffing at the applicable facility operated by our tenants. These actions on behalf of former patients of our current or prior tenants all relate to events which occurred after the Company transitioned the operations of the facilities in question to a third-party operator (and of which four such actions relate to events which occurred after the Company sold such facilities) and are subject to such operators’ indemnification obligations in favor of the Company. There is no assurance that our tenants will have sufficient assets, income, access to financing and insurance coverage to enable them to satisfy their respective indemnification obligations.

During the three months ended June 30, 2021, one professional and general liability action, related to the Company’s current or former tenant’s former patients was filed against the Company. The Company was subsequently dismissed with prejudice from this action on July 6, 2021.  

During the three months ended March 31, 2021, no professional and general liability actions related to the Company’s current or former tenant’s former patients were filed against the Company.

Prior Year Summary

During the three months ended June 30, 2020, two professional and general liability actions related to the Company’s current or former tenant’s former patients were filed against the Company.

During the three months ended March 31, 2020, one professional and general liability action related to the Company’s current or former tenant’s former patients was filed against the Company.

During the three months ended June 30, 2020, one professional and general liability action was dismissed without prejudice.

As of June 30, 2020, the Company was a defendant in an aggregate of 11 professional and general liability actions, primarily commenced on behalf of one of our former patients and ten of our current or prior tenant’s former patients.

The Company established a self-insurance reserve for its professional and general liability claims, included within “Accrued expenses” on the Company’s consolidated balance sheets of $0.2 million and $0.2 million as of June 30, 2021 and December 31, 2020, respectively. Additionally, as of June 30, 2021 and December 31, 2020, $0.1 million and $0.1 million, respectively, was reserved for settlement amounts in “Accounts payable” on the Company’s consolidated balance sheets. For additional information regarding the Company’s self-insurance reserve, see Part II, Item 8, “Financial Statements and Supplementary Data”, Note 14 – Commitments and Contingencies included in the Annual Report.

Ohio Attorney General Action. On January 15, 2020, Ohio Attorney General (the “OAG”) voluntarily dismissed with prejudice all claims pending against the Company, certain subsidiaries of the Company and certain other parties, in the action they filed on October 27, 2016, in the Court of Common Pleas, Franklin County, Ohio. The dismissed lawsuit alleged that defendants, including the Company submitted improper Medicaid claims for independent laboratory services for glucose blood tests and capillary blood draws and further alleged that defendants (i) engaged in deception, (ii) willfully received Medicaid payments to which they were not entitled or in a greater amount than that to which they were entitled, and (iii) obtained payments under the Medicaid program to which they were not entitled pursuant to their provider agreements and applicable Medicaid rules and regulations. The OAG sought, among other things, triple the amount of damages proven at trial (plus interest) and not less than $5,000 and not more than $10,000 for each deceptive claim or falsification. As previously disclosed, the Company had received a letter from the OAG in February 2014 offering to settle its claims against the defendants for improper Medicaid claims related to glucose blood tests and capillary blood draws for a payment of approximately $1.0 million, which offer the Company declined. The January 15, 2020, dismissal of the case with prejudice renders all claims against the Company moot.  

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Segments Results

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Segments Results

NOTE 13. SEGMENT RESULTS

Effective January 1, 2021, pursuant to the Wellington Lease Termination, as a portfolio stabilization measure the Company commenced operating the previously subleased Tara Facility. Accordingly, the Company now has two primary reporting segments: (i) Real Estate Services, which consists of the leasing and subleasing of long-term care and senior living facilities to third-party tenants, including the Company’s management of three facilities on behalf of third-party owners; and (ii) Healthcare Services, which consists of the operation of the Tara Facility.

The Company reports segment information based on the “management approach” defined in ASC 280, Segment Reporting. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of our reportable segments.

The table below presents the results of operations for our reporting segments for the periods presented.

	Three Months Ended June 30,												Six Months Ended June 30,
	2021			2021			2021			2020			2021			2021			2021			2020
(Amounts in 000’s)	Real Estate Services			Healthcare Services			Total			Real Estate Services			Real Estate Services			Healthcare Services			Total			Real Estate Services
Revenues:
Patient care revenues	$	—		$	2,445		$	2,445		$	—		$	—		$	5,135		$	5,135		$	—
Rental revenues		3,763			—			3,763			4,293			7,844			—			7,844			8,590
Management fees		247			—			247			244			495			—			495			488
Other revenues		13			—			13			2			75			—			75			9
Total revenues		4,023			2,445			6,468			4,539			8,414			5,135			13,549			9,087
Expenses:
Patient care expense		—			2,254			2,254			—			—			4,457			4,457			—
Facility rent expense		1,342			297			1,639			1,639			2,684			595			3,279			3,279
Cost of management fees		150			—			150			174			315			—			315			325
Depreciation and amortization		649			3			652			769			1,297			5			1,302			1,545
General and administrative expense		823			122			945			714			1,722			259			1,981			1,591
Doubtful accounts expense (recovery)		—			37			37			(135	)		—			77			77			(137	)
Other operating expenses		239			4			243			297			471			4			475			521
Total expenses		3,203			2,717			5,920			3,458			6,489			5,397			11,886			7,124
Income (loss) from operations		820			(272	)		548			1,081			1,925			(262	)		1,663			1,963
Other expense (income) :
Interest expense, net		663			3			666			684			1,344			9			1,353			1,399
Other expense (income), net		323			—			323			(9	)		717			—			717			135
Total other expense (income), net		986			3			989			675			2,061			9			2,070			1,534
(Loss) income from continuing operations before income taxes		(166	)		(275	)		(441	)		406			(136	)		(271	)		(407	)		429
(Loss) income from continuing operations	$	(166	)	$	(275	)	$	(441	)	$	406		$	(136	)	$	(271	)	$	(407	)	$	429
(Loss) income from discontinued operations, net of tax		(62	)		—			(62	)		6			(75	)		—			(75	)		(31	)
Net Income (loss)	$	(228	)	$	(275	)	$	(503	)	$	412		$	(211	)	$	(271	)	$	(482	)	$	398

Total assets for the Real Estate Services segment and Healthcare Services segment were $105.7 million and $1.5 million, respectively, as of June 30, 2021.

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Subsequent Events

6 Months Ended

Jun. 30, 2021

Subsequent Events [Abstract]

Subsequent Events

NOTE 14. SUBSEQUENT EVENTS

The Company has evaluated all subsequent events through the date the consolidated financial statements were issued and filed with the SEC.

On August 13, 2021, the Company received official notification from FountainHead Commercial Capital, providers of our $0.2 million PPP loan that the full $0.2 million was forgiven by the SBA on July 9, 2021.

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Organization and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Description of Business

Description of Business

Regional Health Properties, Inc., a Georgia corporation (“Regional Health” or “Regional” and, together with its subsidiaries, the “Company” or “we”), is a self-managed real estate investment company that invests primarily in real estate purposed for long-term care and senior living. The Company’s business primarily consists of leasing and subleasing healthcare facilities to third-party tenants, which in turn operate the facilities. The operators of the Company’s facilities provide a range of healthcare services to their patients and residents, including skilled nursing and assisted living services, social services, various therapy services, and other rehabilitative and healthcare services for both long-term and short-stay patients and residents.

As of June 30, 2021, the Company owned, leased or managed for third parties, or operated, 24 facilities, primarily in the Southeastern United States. Of the 24 facilities, the Company: (i) leased 10 skilled nursing facilities (which the Company owns) to third-party tenants, subleased eight skilled nursing facilities (which the Company leases) to third-party tenants, and operated, as of January 1, 2021 as a portfolio stabilization measure, one previously subleased skilled nursing facility (which the Company leases); (ii) leased two assisted living facilities (which the Company owns) to third-party tenants; and (iii) managed, on behalf of third-party owners, two skilled nursing facilities and one independent living facility. Accordingly, as of January 1, 2021, the Company has two primary reporting segments: (i) real estate services, which consists of the leasing and subleasing of long-term care and senior living facilities to third-party tenants, including the Company’s management of three facilities on behalf of third-party owners (“Real Estate Services”); and (ii) healthcare services, which consists of the operation of a skilled nursing facility (“Healthcare Services”).

Effective January 1, 2021, the Company terminated the subleases for two skilled nursing facilities located in Georgia (the “Wellington Lease Termination”) with affiliates of Wellington Healthcare Services II, L.P. (“Wellington”), and as a portfolio stabilization measure, the Company commenced operating one of the facilities, a previously subleased 134-bed skilled nursing facility located in Thunderbolt, Georgia (the “Tara Facility”) and entered into a new sublease agreement with an affiliate of Empire Care Centers, LLC (“Empire”) for the other facility, a 208-bed skilled nursing facility located in Powder Springs, Georgia (the “Powder Springs Facility”). The Company has entered into a Management Consulting Services Agreement (the “Vero Management Agreement”) with Vero Health Management, LLC (“Vero Health”) under which Vero Health provides management consulting services for the Tara Facility, which the Company now operates. See Note 6 – Leases, herein, and Note 6 – Leases in Part II, Item 8, “Financial Statements and Supplemental Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (“SEC”) on March 29, 2021 (the “Annual Report”), for a more detailed description of the Company’s leases.

The Company leases its currently-owned healthcare properties, and subleases its currently-leased healthcare properties, on a triple-net basis, meaning that the lessee (i.e., the third-party operator of the property) is obligated under the lease or sublease, as applicable, for all costs of operating the property, including insurance, taxes and facility maintenance, as well as the lease or sublease payments, as applicable. These leases are generally long-term in nature with renewal options and annual rent escalation clauses.

Regional Health is successor to, and a former wholly owned subsidiary of, AdCare Health Systems, Inc. (“AdCare”). On September 29, 2017, AdCare merged (the “Merger”) with and into Regional Health, which was formed as a subsidiary of AdCare for the purpose of the Merger, with Regional Health continuing as the surviving corporation in the Merger. For a description of the Merger, see Part II, Item 8, “Financial Statements and Supplemental Data”, Note 1 – Summary of Significant Accounting Policies included in the Annual Report.

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations for the periods presented have been included.  Operating results for the three and six months ended June 30, 2021 and 2020 are not necessarily indicative of the results that may be expected for the fiscal year. The consolidated balance sheet at December 31, 2020 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. 

You should read the unaudited consolidated financial statements in this Quarterly Report on Form 10-Q (this “Quarterly Report”) together with the historical audited consolidated financial statements of the Company for the year ended December 31, 2020, included in the Annual Report. See Part II, Item 8, “Financial Statements and Supplementary Data”, Note 1 – Summary of Significant Accounting Policies included in the Annual Report, for a description of all significant accounting policies. During the three and six months ended June 30, 2021, there were no material changes to the Company’s policies.

Risks and Uncertainties

Risks and Uncertainties

While the Company is a self-managed real estate investment company that invests primarily in real estate purposed for long-term care and senior living, the Company, when business conditions require, may undertake portfolio stabilization measures, such as operating a previously leased facility. On January 1, 2021, following the Wellington Lease Termination, the Company commenced operating the Tara Facility, which facility comprises approximately 5.0% of the total amount of the Company’s licensed patient beds. This portfolio stabilization measure exposes the Company directly to all the risks our tenants face as discussed in this “Risk and Uncertainties” section and “Risks Related to Our Business - Our portfolio stabilization measures expose the Company to the various risks facing our tenants” in Part I, Item 1.A, “Risk Factors.” in the Annual Report.

On March 11, 2020, the World Health Organization declared the outbreak of the respiratory illness caused by a novel strain of coronavirus, SARS-CoV-2, also known as COVID-19, a global pandemic. The COVID-19 pandemic has led governments and other authorities in the United States to impose measures intended to control its spread, including restrictions on freedom of movement and business operations such as travel bans, border closings, business closures, quarantines and shelter-in-place orders. The COVID-19 pandemic and the measures to protect its spread have adversely affected our business during the six months ended June 30, 2021, and we expect it will continue to adversely affect our business in the quarter ending September 30, 2021 and beyond, for a variety of reasons, including those discussed below and elsewhere in this Quarterly Report.

As of August 13, 2021, the Company is aware that each of our facilities has previously reported one or more positive cases of COVID-19 among the residents and/or operator employee populations. Many of our operators have reported incurring significant cost increases as a result of the COVID-19 pandemic, with dramatic increases for facilities with positive cases. We believe these increases primarily stem from elevated labor costs, including increased use of overtime and bonus pay, as well as a significant increase in both the cost and usage of personal protective equipment, testing equipment, processes and supplies. In terms of occupancy levels, many of our operators have reported experiencing declines, in part due to the elimination or suspension of elective hospital procedures, fewer discharges from hospitals to skilled nursing facilities (“SNFs”), and higher hospital re-admittances from SNFs.

The COVID-19 pandemic may also lead to temporary closures of nursing facilities, operated by our tenants, which also may affect our tenants’ ability to make their rental payments to us pursuant to their respective lease agreements. In addition, our tenants’ operations could be further disrupted if any of their employees, or the employees of their vendors, have, or are suspected of having, COVID-19. This could cause, and in some cases has already caused, our tenants or their vendors to experience staffing shortages, and this could potentially require our tenants and their vendors to close parts of or entire facilities, distribution centers, or other buildings to disinfect any affected areas.

We could also be adversely affected if government authorities impose upon our tenants, or their vendors, certain restrictions due to the COVID-19 pandemic. These restrictions may be in the form of mandatory closures, requested voluntary closures, bans on new admissions, restricted operations, or restrictions on the importation of necessary equipment or supplies which may adversely affect our tenants’ operations and their ability to make rental payments to us moving forward. In addition, family members may elect to keep nursing facility residents at home during the COVID-19 pandemic, thus reducing our tenants’ revenue. Currently, a number of our tenants have stopped admitting new patients due to rising COVID-19 infections which has resulted in decreased revenues.

As a result of the COVID-19 pandemic, our tenants may face lawsuits for alleged negligence associated with their responses to the emergency. The costs associated with defending, settling, or paying damages from such claims could negatively impact our tenants’ operating budgets and affect their ability to meet their obligations under our leases. Further, we may be subject to increased lawsuits arising out of our alleged actions or the alleged actions of our tenants for which they have agreed to indemnify, defend and hold us harmless. An unfavorable resolution of any such pending or future litigation could materially adversely affect us. The Company is not aware of any such lawsuits against our tenants.

If our tenants are unable to make rental payments to us pursuant to their lease obligations, whether due to the tenants’ decrease in revenues or otherwise, then, in some cases, we may be forced to either attempt to replace tenants or restructure tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to us as those currently in place.

While the Company has received approximately 97% of its expected fixed monthly rental receipts from tenants for the three and six months ended June 30, 2021, there are a number of uncertainties the Company faces as it considers the potential impact of COVID-19 on its business, including the length of census disruption, elevated COVID-19 operating costs related to personal protection equipment, cleaning supplies, virus testing and increased overtime due to staff illness and the extent to which federal and state funding support will offset these incremental costs for our tenants. To the extent government support is not sufficient or timely to offset these impacts, or to the extent these trends continue or accelerate and are not offset by additional government relief that is sufficient or timely, the operating results of our operators are likely to be adversely affected, and some may be unwilling or unable to pay their contractual obligations to us in full or on a timely basis, as has occurred with one of our prior operators.

We also do not know the number of facilities that will ultimately experience widespread, high-cost outbreaks of COVID-19. While we have requested reporting case numbers from our operators and the U.S. Department of Health and Human Services Centers for Medicare and Medicaid Services (“CMS”) has required additional reporting by operators, we may not receive accurate information on the number of cases, which could result in a delay in reporting. We expect to see continued increased clinical protocols for infection control within facilities and increased monitoring of employees, guests and other individuals entering facilities; however, we do not yet know if future reimbursement rates will be sufficient to cover the increased costs of enhanced infection control and monitoring. The extent of the COVID-19 pandemic’s effect on our and our operators’ operational and financial performance will depend on future developments, including the ultimate duration, spread and intensity of the outbreak, which may depend on factors such as the development and implementation of an effective vaccine and treatments for COVID-19, government funds and other support for the senior care sector and the efficacy of other policies and measures that may mitigate the impact of the pandemic, all of which are uncertain and difficult to predict. Due to these uncertainties, we are unable at this time to estimate the effect of these factors on our business, but the adverse impact on our business, results of operations, financial condition and cash flows could be material.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

Revenue Recognition and Allowances

Revenue Recognition and Allowances

Patient Care Revenue. Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers requires a company to recognize revenue when the company transfers control of promised goods and services to a customer. Revenue is recognized in an amount that reflects the consideration to which a company expects to receive in exchange for such goods and services. Revenue from our new Healthcare Services business segment is derived from services rendered to patients in the Tara Facility. The Company receives payments from the following sources for services rendered in our facilities: (i) the federal government under the Medicare program administered by CMS; (ii) state governments under their respective Medicaid and similar programs; (iii) commercial insurers; and (iv) individual patients and clients. The vast majority of the revenue the Company has recognized is from government sources. The Company determines the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients and other price concessions. Contractual adjustments and discounts are based on contractual agreements, discount policies and historical experience. The Company recognizes revenue at the amount that reflects the consideration the Company expects to receive in exchange for the services provided. These amounts are due from residents or third-party payors and include variable consideration for retroactive adjustments from estimated reimbursements, if any, under reimbursement programs. Performance obligations are determined based on the nature of the services provided. Revenue is recognized as performance obligations are satisfied. Estimated uncollectable amounts due from patients are generally considered implicit price concessions that are a direct reduction to net operating revenues.

Triple-Net Leased Properties. The Company’s triple-net leases provide for periodic and determinable increases in rent. The Company recognizes rental revenues under these leases on a straight-line basis over the applicable lease term when collectability is probable. Recognizing rental income on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a straight-line rent receivable that is included in straight-line rent receivable on our consolidated balance sheets. In the event the Company cannot reasonably estimate the future collection of rent from one or more tenant(s) of the Company’s facilities, rental income for the affected facilities is recognized only upon cash collection, and any accumulated straight-line rent receivable is expensed in the period in which the Company deems rent collection to no longer be probable.

Management Fees, Revenue from Contracts with Customers. The Company recognizes management fee revenues as services are provided. The Company has one contract to manage three facilities (the “Management Contract”), with payment for each month of service received in full on a monthly basis. The maximum penalty for service contract nonperformance under the Management Contract is $50,000 per year, payable after the end of the year.

Other revenues. The Company recognizes interest income from loans and investments, using the effective interest method when collectability is probable. The Company applies the effective interest method on a loan-by-loan basis.

Allowances. The Company assesses the collectability of its rent receivables, including straight-line rent receivables and working capital loans to tenants. The Company bases its assessment of the collectability of rent receivables and working capital loans to tenants on several factors, including payment history, the financial strength of the tenant and any guarantors, the value of the underlying collateral, and current economic conditions. If the Company’s evaluation of these factors indicates it is probable that the Company will be unable to receive the rent payments or payments on a working capital loan, then the Company provides a reserve against the recognized straight-line rent receivable asset or working capital loan for the portion that we estimate may not be recovered. Payments received on impaired loans are applied against the allowance. If the Company changes its assumptions or estimates regarding the collectability of future rent payments required by a lease or required from a working capital loan to a tenant, then the Company may adjust its reserve to increase or reduce the rental revenue or interest revenue from working capital loans to tenants recognized in the period the Company makes such change in its assumptions or estimates. In an effort to ensure a conservative presentation of the results of the Healthcare Services segment due to lack of history, the Company has provided an additional allowance for patient care receivables of 1.5% of patient revenues.

As of June 30, 2021 and December 31, 2020, the Company reserved for approximately $0.1 million and $1.4 million, respectively, of uncollected receivables. Accounts receivable, net of allowance, totaled $1.6 million at June 30, 2021 and $2.1 million at December 31, 2020.

The following table presents the Company's Accounts receivable, net of allowance for the periods presented:

(Amounts in 000’s)	June 30, 2021			December 31, 2020
Gross receivables
Real Estate Services (a)	$	777		$	3,481
Healthcare Services		925			—
Sub Total		1,702			3,481
Allowance
Real Estate Services (a)		(32	)		(1,381	)
Healthcare Services		(77	)		—
Sub Total		(109	)		(1,381	)
Accounts receivable, net of allowance	$	1,593		$	2,100

(a) See Note 6– Leases for details on the impact of the Wellington Lease Termination.

Pre-Paid Expenses and Other

Pre-Paid Expenses and Other

As of June 30, 2021 and December 31, 2020, the Company had approximately $1.0 million and $0.3 million, respectively, in pre-paid expenses and other, the $0.7 million increase is related to insurance for the Tara Facility operations, while the other amounts are predominantly for directors’ and officers’ insurance, NYSE American annual fees and mortgage insurance premiums.

Accounts Payable

Accounts Payable

The following table presents the Company's Accounts payable for the periods presented:

(Amounts in 000’s)	June 30, 2021		December 31, 2020
Accounts payable
Real Estate Services	$	3,078	$	3,008
Healthcare Services		305		—
Total Accounts payable	$	3,383	$	3,008

Other Liabilities

Other liabilities

As of June 30, 2021 and December 31, 2020, the Company had approximately $1.5 million and $1.4 million, in Other liabilities, consisting of security lease deposits and sublease improvement funds.

Other Expense, Net

Other expense, net

The Company has retained professional services to evaluate and assist with possible opportunities to improve the Company’s capital structure.

Leases and Leasehold Improvements

Leases and Leasehold Improvements

The Company leases certain facilities and equipment in the normal course of business. At the inception of each lease, the Company performs an evaluation to determine whether the lease should be classified as an operating lease or capital lease. As of June 30, 2021, all of the Company’s leased facilities are accounted for as operating leases. For operating leases that contain scheduled rent increases, the Company records rent expense on a straight-line basis over the term of the lease. Leasehold improvements are amortized over the shorter of the useful life of the asset or the lease term.

In accordance with Accounting Standards Update (“ASU”) ASU 2016-02, Leases, as codified in ASC 842, the Company recognizes both right of use assets and lease liabilities for leases in which we lease land, real property or other equipment, having elected the practical expedient to maintain the prior operating lease classification for leases entered into prior to January 1, 2019. We assess any new contracts or modification of contracts in accordance with ASC 842 to determine the existence of a lease and its classification. We are reporting revenues and expenses for real estate taxes and insurance, where the lessee has not made those payments directly to a third-party in accordance with their respective leases with us.

The following table summarizes real estate tax recognized on our consolidated statements of operations for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in 000’s)	2021		2020		2021		2020
Rental revenues	$	98	$	119	$	231	$	245
Other operating expenses	$	98	$	119	$	231	$	245

Additionally, we expense certain leasing costs, other than leasing commissions, as they are incurred. Prior GAAP provided for the deferral and amortization of such costs over the applicable lease term. The present value of minimum lease payments was calculated on each lease, using a discount rate of 7.98% for the Company’s leases that approximated our incremental borrowing rate as of January 1, 2019, and the current lease term. See Note 6– Leases for more information on the Company’s operating leases.

Insurance

Insurance

We maintain general liability, professional liability, and other insurance policies in amounts and with coverage and deductibles we believe are appropriate, based on the nature and risks of our business, historical experience, availability, and industry standards, including for the operations at the Tara Facility. Our current policies provide for deductibles for each claim and contain various exclusions from coverage. The Company has self-insured against professional and general liability claims related to its healthcare operations that were discontinued during 2014 and 2015 in connection with its transition from an owner and operator of healthcare properties to a healthcare property holding and leasing company (the “Transition”). See Part II, Item 8, “Financial Statements and Supplementary Data”, Note 14 – Commitments and Contingencies in the Annual Report for more information. The Company evaluates quarterly the adequacy of its self-insurance reserve based on a number of factors, including: (i) the number of actions pending and the relief sought; (ii) analyses provided by defense counsel, medical experts or other information which comes to light during discovery; (iii) the legal fees and other expenses anticipated to be incurred in defending the actions; (iv) the status and likely success of any mediation or settlement discussions, including estimated settlement amounts and legal fees and other expenses anticipated to be incurred in such settlement, as applicable; and (v) the venues in which the actions have been filed or will be adjudicated. The Company believes that most of the professional and general liability actions are defensible and intends to defend them through final judgment unless settlement is more advantageous to the Company. Accordingly, the self-insurance reserve reflects the Company’s estimate of settlement amounts for the pending actions, if applicable, and legal costs of settling or litigating the pending actions, as applicable. Because the self-insurance reserve is based on estimates, the amount of the self-insurance reserve may not be sufficient to cover the settlement amounts actually incurred in settling the pending actions, or the legal costs actually incurred in settling or litigating the pending actions. See Note 7 – Accrued Expenses. In addition, the Company maintains certain other insurance programs, including commercial general liability, property, casualty, directors’ and officers’ liability, crime and employment practices liability.

Earnings Per Share

Earnings Per Share

Basic earnings per share is computed by dividing net income or loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the respective period. Diluted earnings per share is similar to basic earnings per share except that the net income or loss is adjusted by the impact of the weighted-average number of shares of common stock outstanding including potentially dilutive securities (such as options, warrants and non-vested common stock) when such securities are not anti-dilutive. Potentially dilutive securities from options, warrants and unvested restricted shares are calculated in accordance with the treasury stock method, which assumes that proceeds from the exercise of all options and warrants with exercise prices exceeding the average market value are used to repurchase common stock at market value. The incremental shares remaining after the proceeds are exhausted represent the potentially dilutive effect of the securities.

Securities outstanding that were excluded from the computation, because they would have been anti-dilutive were as follows:

	June 30,
(Share amounts in 000’s)	2021		2020
Stock options		13		15
Warrants - employee		49		49
Warrants - non employee		9		9
Total anti-dilutive securities		71		73

The weighted average contractual terms in years for these securities as of June 30, 2021, with no intrinsic value, are 3.0 years for the stock options and 2.5 years for the warrants.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In July 2021, the FASB issued ASU 2021-05—Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments, which amends the lease classification requirements for lessors. Lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if the lease would have been classified as a sales-type lease or a direct financing lease and the lessor would have otherwise recognized a day-one loss. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2021-05 on its consolidated financial statements.

See Part II, Item 8, “Financial Statements and Supplementary Data”, Note 1 – Summary of Significant Accounting Policies included in the Annual Report, for a description of the other accounting pronouncements the Company is currently evaluating.

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Organization and Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Company's Accounts Receivable, Net of Allowance

The following table presents the Company's Accounts receivable, net of allowance for the periods presented:

(Amounts in 000’s)	June 30, 2021			December 31, 2020
Gross receivables
Real Estate Services (a)	$	777		$	3,481
Healthcare Services		925			—
Sub Total		1,702			3,481
Allowance
Real Estate Services (a)		(32	)		(1,381	)
Healthcare Services		(77	)		—
Sub Total		(109	)		(1,381	)
Accounts receivable, net of allowance	$	1,593		$	2,100

(a) See Note 6– Leases for details on the impact of the Wellington Lease Termination.

Company's Accounts Payable

The following table presents the Company's Accounts payable for the periods presented:

(Amounts in 000’s)	June 30, 2021		December 31, 2020
Accounts payable
Real Estate Services	$	3,078	$	3,008
Healthcare Services		305		—
Total Accounts payable	$	3,383	$	3,008

Summary of Real Estate Tax Recognized on Consolidated Statements of Operations

The following table summarizes real estate tax recognized on our consolidated statements of operations for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in 000’s)	2021		2020		2021		2020
Rental revenues	$	98	$	119	$	231	$	245
Other operating expenses	$	98	$	119	$	231	$	245

Schedule of Securities Outstanding that were Excluded From the Computation, Prior to the Use of the Treasury Stock Method, Because They Would Have Been Anti-dilutive

Securities outstanding that were excluded from the computation, because they would have been anti-dilutive were as follows:

	June 30,
(Share amounts in 000’s)	2021		2020
Stock options		13		15
Warrants - employee		49		49
Warrants - non employee		9		9
Total anti-dilutive securities		71		73

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Cash and Restricted Cash (Tables)

6 Months Ended

Jun. 30, 2021

Restricted Cash And Investments [Abstract]

Schedule of Cash and Restricted Cash

The following presents the Company's cash and restricted cash:

(Amounts in 000’s)	June 30, 2021		December 31, 2020
Cash	$	5,633	$	4,186
Restricted cash:
Cash collateral		62		124
HUD and other replacement reserves		1,827		1,675
Escrow deposits		760		1,190
Restricted investments for debt obligations		317		317
Total restricted cash		2,966		3,306
Total cash and restricted cash	$	8,599	$	7,492

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2021

Property Plant And Equipment [Abstract]

Schedule of Property and Equipment

The following table sets forth the Company’s property and equipment:

(Amounts in 000’s)	Estimated Useful Lives (Years)		June 30, 2021			December 31, 2020
Buildings and improvements	5-40		$	65,687		$	65,629
Equipment and computer related	2-10			5,047			5,139
Land (1)		—		2,776			2,776
Construction in process		—		5			69
				73,515			73,613
Less: accumulated depreciation and amortization				(22,160	)		(21,080	)
Property and equipment, net			$	51,355		$	52,533

(1) Includes $0.1 million of land improvements with an average estimated useful remaining life of approximately 7.4 years.

The following table summarizes total depreciation and amortization expense for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in 000’s)	2021		2020		2021		2020
Depreciation	$	543	$	544	$	1,083	$	1,094
Amortization		109		225		219		451
Total depreciation and amortization expense	$	652	$	769	$	1,302	$	1,545

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Intangible Assets and Goodwill (Tables)

6 Months Ended

Jun. 30, 2021

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets and Goodwill

Intangible assets and Goodwill consist of the following:

(Amounts in 000’s)	Bed licenses (included in property and equipment)(a)			Bed Licenses - Separable (b)		Lease Rights			Total			Goodwill (b)
Balances, December 31, 2020
Gross	$	14,276		$	2,471	$	206		$	16,953		$	1,585
Accumulated amortization		(3,754	)		—		(48	)		(3,802	)		—
Net carrying amount	$	10,522		$	2,471	$	158		$	13,151		$	1,585
Amortization expense		(207	)		—		(12	)		(219	)		—
Balances, June 30, 2021
Gross		14,276			2,471		206			16,953			1,585
Accumulated amortization		(3,961	)		—		(60	)		(4,021	)		—
Net carrying amount	$	10,315		$	2,471	$	146		$	12,932		$	1,585

(a) Non-separable bed licenses are included in property and equipment as is the related accumulated amortization expense (see Note 4 – Property and Equipment).

(b) The Company does not amortize indefinite-lived intangibles, which consist of separable bed licenses and goodwill.

Schedule of Total Amortization Expense

The following table summarizes amortization expense for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in 000’s)	2021		2020		2021		2020
Bed licenses	$	103	$	103	$	207	$	207
Lease rights		6		122		12		244
Total amortization expense	$	109	$	225	$	219	$	451

Schedule of Estimated Amortization Expense for All Definite Lived Intangibles

Expected amortization expense for the year ended December 31, for all definite-lived intangibles, for each of the next five years and thereafter is as follows: 

(Amounts in 000’s)	Bed Licenses		Lease Rights
2021 (a)	$	207	$	12
2022		414		24
2023		414		23
2024		414		18
2025		414		18
Thereafter		8,452		51
Total expected amortization expense	$	10,315	$	146

(a) Estimated amortization expense for the year ending December 31, 2021, includes only amortization to be recorded after June 30, 2021.

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Leases (Tables)

6 Months Ended

Jun. 30, 2021

Leases [Abstract]

Schedule of Future Minimum Lease Payments

Future minimum lease payments for the year ended December 31, for each of the next five years and thereafter is as follows:

(Amounts in 000’s)	Future rental payments		Accretion of lease liability (1)			Operating lease obligation
2021 (2)	$	3,336	$	(106	)	$	3,230
2022		6,752		(591	)		6,161
2023		6,851		(1,050	)		5,801
2024		6,958		(1,494	)		5,464
2025		7,095		(1,950	)		5,145
Thereafter		12,736		(4,497	)		8,239
Total	$	43,728	$	(9,688	)	$	34,040

(1) Weighted average discount rate 7.98%.

(2) Estimated minimum lease payments for the year ending December 31, 2021 include only payments to be paid after June 30, 2021.

Schedule of Future Minimum Lease Receivables

Future minimum lease receivables for the year ended of December 31, for each of the next five years and thereafter is as follows: 

	(Amounts in 000's)
2021 (a)	$	6,276
2022		13,519
2023		15,477
2024		15,299
2025		13,702
Thereafter		33,555
Total	$	97,828

(a) Estimated minimum lease receivables for the year ending December 31, 2021 include only payments scheduled to be received after June 30, 2021.

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Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2021

Payables And Accruals [Abstract]

Schedule of Accrued Expenses

Accrued expenses consist of the following:

(Amounts in 000’s)	June 30, 2021		December 31, 2020
Accrued employee benefits and payroll-related	$	541	$	218
Real estate and other taxes (1)		1,257		491
Self-insured reserve (2)		168		183
Accrued interest		284		424
Unearned rental revenue		42		41
Other accrued expenses		1,028		868
Total accrued expenses	$	3,320	$	2,225

(1) Includes approximately $0.7 million of bed taxes in arrears related to the Wellington Transition and approximately $0.3 million bed tax accrual for the six months ended June 30, 2021 for the Healthcare Services segment.

(2) The Company self-insures against professional and general liability cases incurred prior to the Transition and uses a third-party administrator and outside counsel to manage and defend the claims (see Note 12 - Commitments and Contingencies).

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Notes Payable and Other Debt (Tables)

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Schedule of Notes Payable and Other Debt

Notes payable and other debt consists of the following:

(Amounts in 000’s)	June 30, 2021			December 31, 2020
Senior debt—guaranteed by HUD	$	30,646		$	31,104
Senior debt—guaranteed by USDA		13,008			13,139
Senior debt—guaranteed by SBA		615			628
Senior debt—bonds		6,379			6,500
Senior debt—other mortgage indebtedness		3,555			3,631
Other debt		1,291			822
Subtotal		55,494			55,824
Deferred financing costs		(1,202	)		(1,250	)
Unamortized discount on bonds		(129	)		(135	)
Notes payable and other debt	$	54,163		$	54,439

The following is a detailed listing of the debt facilities that comprise each of the above categories:

(Amounts in 000’s)
Facility	Lender	Maturity	Interest Rate (a)			June 30, 2021		December 31, 2020
Senior debt - guaranteed by HUD (b)
The Pavilion Care Center	Orix Real Estate Capital	12/01/2027	Fixed	4.16	%	$	925	$	986
Hearth and Care of Greenfield	Orix Real Estate Capital	08/01/2038	Fixed	4.20	%		1,883		1,920
Woodland Manor	Midland State Bank	10/01/2044	Fixed	3.75	%		4,902		4,968
Glenvue	Midland State Bank	10/01/2044	Fixed	3.75	%		7,613		7,712
Autumn Breeze	KeyBank	01/01/2045	Fixed	3.65	%		6,617		6,705
Georgetown	Midland State Bank	10/01/2046	Fixed	2.98	%		3,350		3,394
Sumter Valley	KeyBank	01/01/2047	Fixed	3.70	%		5,356		5,419
Total						$	30,646	$	31,104
Senior debt - guaranteed by USDA (c)
Coosa (d)	Metro City	09/30/2035	Prime + 1.50%	5.50	%		5,101		5,149
Mountain Trace (e)	Community B&T	12/24/2036	Prime + 1.75%	5.75	%		3,914		3,972
Southland (f)	Cadence Bank, NA	07/27/2036	Prime + 1.50%	6.00	%		3,993		4,018
Total						$	13,008	$	13,139
Senior debt - guaranteed by SBA (g)
Southland	Cadence Bank, NA	07/27/2036	Prime + 2.25%	5.50	%		615		628
Total						$	615	$	628

(a) ^{Represents cash interest rates as of June 30, 2021 as adjusted for interest rate floor limitations, if applicable. The rates exclude amortization of deferred financing costs, which range from 0.08% to 0.53% per annum.}

(b) ^{For the seven SNFs, the Company has term loans with financial institutions that are insured 100% by HUD. The loans are secured by, among other things, an assignment of all rents paid under any existing or future leases and rental agreements with respect to the underlying facility. The loans contain customary events of default, including fraud or material misrepresentations or material omission, the commencement of a forfeiture action or proceeding, failure to make required payments, and failure to perform or comply with certain agreements. Upon the occurrence of certain events of default, the lenders may, after receiving the prior written approval of HUD, terminate the loans and all amounts under the loans will become immediately due and payable. In connection with entering into each loan, the Company entered into a healthcare regulatory agreement and a promissory note, each containing customary terms and conditions. Pursuant to the CARES Act, up to three months of debt service payments for six of the credit facilities can be made from our restricted cash reserves.}

(c) ^{For the three SNFs, the Company has term loans with financial institutions that are insured 70% to 80% by the USDA. The loans have an annual renewal fee for the USDA guarantee of 0.25% of the guaranteed portion. The loans have prepayment penalties of 1% through 2021, capped at 1% for the remainder of the first 10 years of the term and 0% thereafter except Coosa (as defined below) which is 1% thereafter.}

(d) Pursuant to the CARES Act, the monthly principal and interest payments due May 1, 2020 through September 1, 2020 for the loan for that certain 124-bed SNF commonly known as Coosa, located in Glencoe, Alabama, were deferred (a part of the “USDA Payment Program”). Monthly payments that commenced on October 1, 2020 were being applied to current interest, then deferred interest until the deferred interest is paid in full on April 1, 2021. Payments have been re-amortized over the remaining term of the loan.

(e) Pursuant to the CARES Act, the monthly principal and interest payments due May 1, 2020 through August 1, 2020 for the Mountain Trace Facility loan were deferred. Monthly payments that commenced on September 1, 2020 were being applied to current interest, then deferred interest until the deferred interest was paid in full on April 1, 2021. Payments have been re-amortized over the extended term of the loan.

(f) Pursuant to the CARES Act, the monthly principal and interest payments due May 1, 2020 through October 1, 2020 for the loan for that certain 126-bed SNF commonly known as Southland, located in Dublin, Georgia, were deferred as a part of the USDA Payment Program. Monthly payments recommenced on November 1, 2020 with payments through February 2021 being applied to principal and interest. Monthly payments that commenced on March 1, 2021 are being applied to current interest, then deferred interest until the deferred interest is paid in full, payments will be re-amortized over the extended term of the loan.

(g) ^{For the one SNF, commonly known as Southland, the Company has a term loan with a financial institution, which is 75% insured by the SBA. The SBA funded two monthly debt payments during the three months ended March 31, 2021 and six payments commencing on March 1, 2020 and ending on August 1, 2020.}

(Amounts in 000’s)
Facility	Lender	Maturity	Interest Rate (a)			June 30, 2021		December 31, 2020
Senior debt - bonds
Eaglewood Bonds Series A	City of Springfield, Ohio	05/01/2042	Fixed	7.65	%	$	6,379	$	6,379
Eaglewood Bonds Series B (b)	City of Springfield, Ohio	05/01/2021	Fixed	8.50	%		—		121
Total						$	6,379	$	6,500

(a) Represents cash interest rates as of June 30, 2021. The rates exclude amortization of deferred financing of approximately 0.01% per annum.

(b) On May 3, 2021, in accordance with the terms of The City of Springfield, Ohio First Mortgage Revenue Series 2012 B Bonds, the Company fully repaid approximately $0.1 million in outstanding principal and interest.

(Amounts in 000’s)
Facility	Lender	Maturity	Interest Rate (a)			June 30, 2021		December 31, 2020
Senior debt - other mortgage indebtedness
Meadowood	Exchange Bank of Alabama	05/01/2022	Fixed	4.50	%		3,555		3,631
Total						$	3,555	$	3,631

(a) ^{Represents cash interest rates as of June 30, 2021 as adjusted for interest rate floor limitations, if applicable. The rates exclude amortization of deferred financing costs of 0.30% per annum.}

(Amounts in 000’s)
Lender	Maturity	Interest Rate			June 30, 2021		December 31, 2020
Other debt
First Insurance Funding (a)	03/01/2022	Fixed	3.63	%	$	294	$	94
Servarus Financial Inc. (b)	11/01/2021	Fixed	5.18	%		273		—
Key Bank	08/25/2021	Fixed	0.00	%		495		495
FountainHead Commercial Capital - PPP Loan (c)	04/16/2022	Fixed	1.00	%		229		229
Marlin Covington Finance	03/11/2021	Fixed	20.17	%		—		4
Total					$	1,291	$	822

(a) Annual Insurance financing primarily for the Company’s directors and officers insurance.  

(b) Insurance financing for professional and general liability and property insurance for the Tara Facility in our Healthcare Services segment.

(c) On August 13, 2021, we received notification that the Paycheck Protection Program Loan (“PPP Loan) was forgiven by the SBA on July 9, 2021. See Note 14 – Subsequent Events.

Summary of the Scheduled Maturities

The schedule below summarizes the scheduled gross maturities as of June 30, 2021 for each of the next five years and thereafter.

For the twelve months ended June 30,	(Amounts in 000’s)
2022	$	6,400
2023		1,726
2024		1,808
2025		1,899
2026		1,994
Thereafter		41,667
Subtotal	$	55,494
Less: unamortized discounts		(129	)
Less: deferred financing costs, net		(1,202	)
Total notes and other debt	$	54,163

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Discontinued Operations (Tables)

6 Months Ended

Jun. 30, 2021

Discontinued Operations And Disposal Groups [Abstract]

Summary of Activity of Discontinued Operations

The following table summarizes the activity of discontinued operations for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in 000’s)	2021			2020			2021			2020
Cost of services	$	62		$	(6	)	$	75		$	31
Net (loss) income	$	(62	)	$	6		$	(75	)	$	(31	)

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Stock Based Compensation (Tables)

6 Months Ended

Jun. 30, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Recognized Stock Based Compensation

For the three and six months ended June 30, 2021 and 2020, the Company recognized stock-based compensation expense as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in 000’s)	2021		2020		2021		2020
Employee compensation:
Restricted stock	$	123	$	—	$	123	$	—
Total employee stock-based compensation expense	$	123	$	—	$	123	$	—
Non-employee compensation:
Board restricted stock	$	—	$	12	$	—	$	24
Total non-employee stock-based compensation expense	$	—	$	12	$	—	$	24
Total stock-based compensation expense	$	123	$	12	$	123	$	24

Summary of Company's Restricted Stock Activity

The following table summarizes the Company’s restricted stock activity for the six months ended June 30, 2021:

	Number of Shares (000's)			Weighted Avg. Grant Date (per Share) Fair Value
Unvested, December 31, 2020		14		$	3.60
Granted		39		$	13.26
Vested		(22	)	$	7.18
Unvested, June 30, 2021		31		$	13.26

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Segments Results (Tables)

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Summary of Results of Operations for Reporting Segments

The table below presents the results of operations for our reporting segments for the periods presented.

	Three Months Ended June 30,												Six Months Ended June 30,
	2021			2021			2021			2020			2021			2021			2021			2020
(Amounts in 000’s)	Real Estate Services			Healthcare Services			Total			Real Estate Services			Real Estate Services			Healthcare Services			Total			Real Estate Services
Revenues:
Patient care revenues	$	—		$	2,445		$	2,445		$	—		$	—		$	5,135		$	5,135		$	—
Rental revenues		3,763			—			3,763			4,293			7,844			—			7,844			8,590
Management fees		247			—			247			244			495			—			495			488
Other revenues		13			—			13			2			75			—			75			9
Total revenues		4,023			2,445			6,468			4,539			8,414			5,135			13,549			9,087
Expenses:
Patient care expense		—			2,254			2,254			—			—			4,457			4,457			—
Facility rent expense		1,342			297			1,639			1,639			2,684			595			3,279			3,279
Cost of management fees		150			—			150			174			315			—			315			325
Depreciation and amortization		649			3			652			769			1,297			5			1,302			1,545
General and administrative expense		823			122			945			714			1,722			259			1,981			1,591
Doubtful accounts expense (recovery)		—			37			37			(135	)		—			77			77			(137	)
Other operating expenses		239			4			243			297			471			4			475			521
Total expenses		3,203			2,717			5,920			3,458			6,489			5,397			11,886			7,124
Income (loss) from operations		820			(272	)		548			1,081			1,925			(262	)		1,663			1,963
Other expense (income) :
Interest expense, net		663			3			666			684			1,344			9			1,353			1,399
Other expense (income), net		323			—			323			(9	)		717			—			717			135
Total other expense (income), net		986			3			989			675			2,061			9			2,070			1,534
(Loss) income from continuing operations before income taxes		(166	)		(275	)		(441	)		406			(136	)		(271	)		(407	)		429
(Loss) income from continuing operations	$	(166	)	$	(275	)	$	(441	)	$	406		$	(136	)	$	(271	)	$	(407	)	$	429
(Loss) income from discontinued operations, net of tax		(62	)		—			(62	)		6			(75	)		—			(75	)		(31	)
Net Income (loss)	$	(228	)	$	(275	)	$	(503	)	$	412		$	(211	)	$	(271	)	$	(482	)	$	398

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Organization and Significant Accounting Policies - Additional Information (Details)		3 Months Ended	6 Months Ended
	Jan. 01, 2021 Facility	Jun. 30, 2021 USD ($) Facility	Jun. 30, 2021 USD ($) Facility Segment	Dec. 31, 2020 USD ($)	Jan. 01, 2019
Acquisition Policy
Number of facilities		24	24
Number of leased agreements executed, owned by company			10
Number of sublease agreements executed, leased by company	1	8	8
Number of assisted living facilities			2
Number of managed skilled nursing facilities	2		2
Number of managed Independent living facilities		1	1
Number of reporting segments | Segment			2
Number of facilities on behalf of third-party owners			3
Expected monthly rental receipts from tenants received		97.00%	97.00%
Maximum penalty for service contract nonperformance | $		$ 50,000	$ 50,000
Percentage of additional allowance for patient care receivables			1.50%
Receivables, estimated allowance for uncollectible accounts | $		109,000	$ 109,000	$ 1,381,000
Accounts receivable, net of allowance | $		1,593,000	1,593,000	2,100,000
Prepaid expenses and other | $		1,000,000.0	1,000,000.0	300,000
Other liabilities | $		$ 1,519,000	$ 1,519,000	1,365,000
Weighted average discount rate		7.98%	7.98%		7.98%
Intrinsic Value | $		$ 0	$ 0
Stock options
Acquisition Policy
Weighted average contractual terms			3 years
Warrants
Acquisition Policy
Weighted average contractual terms			2 years 6 months
Tara
Acquisition Policy
Number of licensed beds	134
Number of subleased facilities	1
Percentage of licensed patient beds	5.00%
Increase in Prepaid expenses and other | $			$ 700,000
Powder Springs
Acquisition Policy
Number of licensed beds	208
Wellington Lease Termination
Acquisition Policy
Receivables, estimated allowance for uncollectible accounts | $		$ 100,000	$ 100,000	$ 1,400,000

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Organization and Significant Accounting Policies - Company's Accounts Receivable, Net of Allowance (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Accounts Notes And Loans Receivable [Line Items]
Gross receivables	$ 1,702	$ 3,481
Allowance	(109)	(1,381)
Accounts receivable, net of allowance	1,593	2,100
Real Estate Services
Accounts Notes And Loans Receivable [Line Items]
Gross receivables	777	3,481
Allowance	(32)	$ (1,381)
Healthcare Services
Accounts Notes And Loans Receivable [Line Items]
Gross receivables	925
Allowance	$ (77)

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Organization and Significant Accounting Policies - Company's Accounts Payable (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Accounts Payable [Line Items]
Accounts payable	$ 3,383	$ 3,008
Real Estate Services
Accounts Payable [Line Items]
Accounts payable	3,078	$ 3,008
Healthcare Services
Accounts Payable [Line Items]
Accounts payable	$ 305

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Organization and Significant Accounting Policies - Summary of Real Estate Tax Recognized on Consolidated Statements of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Accounting Policies [Abstract]
Rental revenues	$ 98	$ 119	$ 231	$ 245
Other operating expenses	$ 98	$ 119	$ 231	$ 245

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Organization and Significant Accounting Policies - Anti-dilutive Securities (Details) - shares shares in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Anti-dilutive securities outstanding that were excluded from the computation
Antidilutive securities	71	73
Stock options
Anti-dilutive securities outstanding that were excluded from the computation
Antidilutive securities	13	15
Warrants - employee
Anti-dilutive securities outstanding that were excluded from the computation
Antidilutive securities	49	49
Warrants - non employee
Anti-dilutive securities outstanding that were excluded from the computation
Antidilutive securities	9	9

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Liquidity - Additional Information (Details) $ / shares in Units, $ in Thousands				3 Months Ended	6 Months Ended		12 Months Ended
	Oct. 02, 2018	Oct. 01, 2018 $ / shares	Jun. 08, 2018	Jun. 30, 2021 USD ($) Facility	Jun. 30, 2021 USD ($) Facility	Jun. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)	May 01, 2022 USD ($)	Aug. 25, 2021 USD ($)	May 14, 2021 USD ($)	Jan. 01, 2021 USD ($)	Jan. 31, 2015 Facility
Management's plan for increasing liquidity
Unrestricted cash				$ 5,600	$ 5,600
Positive cash flow from continuing operations					$ 2,531	$ 820
Number of facilities | Facility				24	24
Total indebtedness				$ 54,163	$ 54,163
Net of deferred financing and unamortized discounts, in indebtedness				1,300	1,300
Debt repayments of principal in next 12 months, amortization				6,400	6,400
Routine debt
Management's plan for increasing liquidity
Debt repayments of principal in next 12 months, amortization				1,400	1,400
Bond Debt
Management's plan for increasing liquidity
Debt repayments of principal in next 12 months, amortization				100	100
Current Maturities of Other Debt
Management's plan for increasing liquidity
Debt repayments of principal in next 12 months, amortization				800	800
Series A Preferred Stock
Management's plan for increasing liquidity
Undeclared preferred stock dividends arrears					32,400	$ 32,400
Increase of preferred stock dividend rate	12.875%	12.875%
Increase of preferred dividends rate per share unpaid and undeclared | $ / shares		$ 3.20
Cumulative preferential cash dividend rate		10.875%	10.875%
Powder Springs
Management's plan for increasing liquidity
Variable rent recognized				100	$ 500
Wellington Lease Termination
Management's plan for increasing liquidity
Transition date					Jan. 01, 2021
Bed taxes				1,700	$ 1,700						$ 1,700
Percentage of anticipated annual revenue							23.00%
Estimated allowance of rent receivable							$ 1,400
Rent receivable							$ 2,700
Cash collected from lease termination					3,200
Insurance refund amount					200
Bed taxes paid					1,000
Collection expenses paid					100
Rent arrears in doubtful not collected					1,300
Rent arrears already collected					$ 1,400
Wellington Tenants | Georgia
Management's plan for increasing liquidity
Number of facilities subleased | Facility												2
Number of facilities | Facility												8
Wellington Tenant
Management's plan for increasing liquidity
Cash rent										$ 1,000
Tara
Management's plan for increasing liquidity
Percentage of lease rent obligation					54.00%
Tara | Current Maturities of Other Debt
Management's plan for increasing liquidity
Debt repayments of principal in next 12 months, amortization				$ 300	$ 300
Key Bank Exit Notes | Other Debt | Subsequent Event
Management's plan for increasing liquidity
Debt repayments of principal in next 12 months, amortization									$ 500
Meadowood Credit Facility | Senior Debt | Forecast
Management's plan for increasing liquidity
Debt repayments of principal in next 12 months, amortization								$ 3,600

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Cash and Restricted Cash - Schedule of Cash and Restricted Cash (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2019
Restricted Cash And Investments [Abstract]
Cash	$ 5,633	$ 4,186
Restricted cash:
Cash collateral	62	124
HUD and other replacement reserves	1,827	1,675
Escrow deposits	760	1,190
Restricted investments for debt obligations	317	317
Total restricted cash	2,966	3,306
Total cash and restricted cash	$ 8,599	$ 7,492	$ 7,177	$ 8,038

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Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 73,515	$ 73,613
Less: accumulated depreciation and amortization	(22,160)	(21,080)
Property and equipment, net	51,355	52,533
Buildings and Improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 65,687	65,629
Buildings and Improvements | Minimum
Property, Plant and Equipment [Line Items]
Useful lives	5 years
Buildings and Improvements | Maximum
Property, Plant and Equipment [Line Items]
Useful lives	40 years
Equipment and Computer Related
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 5,047	5,139
Equipment and Computer Related | Minimum
Property, Plant and Equipment [Line Items]
Useful lives	2 years
Equipment and Computer Related | Maximum
Property, Plant and Equipment [Line Items]
Useful lives	10 years
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 2,776	2,776
Construction in Process
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 5	$ 69

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Property and Equipment - Schedule of Property and Equipment (Parenthetical) (Details) $ in Millions	6 Months Ended
	Jun. 30, 2021 USD ($)
Property, Plant and Equipment [Line Items]
Land improvements	$ 0.1
Land Improvements
Property, Plant and Equipment [Line Items]
Useful lives	7 years 4 months 24 days

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Property and Equipment - Schedule of Total Depreciation and Amortization Expense of Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Property Plant And Equipment [Abstract]
Depreciation	$ 543	$ 544	$ 1,083	$ 1,094
Amortization	109	225	219	451
Total depreciation and amortization expense	$ 652	$ 769	$ 1,302	$ 1,545

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Intangible Assets and Goodwill - Schedule of Intangible Assets and Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Intangible assets net excluding goodwill
Finite and indefinite lived intangible assets, gross	$ 16,953		$ 16,953		$ 16,953
Finite and indefinite lived intangible assets, accumulated amortization	(4,021)		(4,021)		(3,802)
Intangible assets, net carrying amount	12,932		12,932		13,151
Amortization expense	(109)	$ (225)	(219)	$ (451)
Goodwill Roll Forward
Goodwill, Gross	1,585		1,585		1,585
Goodwill, net carrying amount	1,585		1,585		1,585
Bed Licenses Separable
Intangible assets net excluding goodwill
Finite and indefinite lived intangible assets, gross	2,471		2,471		2,471
Intangible assets, net carrying amount	2,471		2,471		2,471
Bed Licenses Included in Property and Equipment
Intangible assets net excluding goodwill
Finite and indefinite lived intangible assets, gross	14,276		14,276		14,276
Finite and indefinite lived intangible assets, accumulated amortization	(3,961)		(3,961)		(3,754)
Intangible assets, net carrying amount	10,315		10,315		10,522
Amortization expense	(103)	(103)	(207)	(207)
Lease Rights
Intangible assets net excluding goodwill
Finite and indefinite lived intangible assets, gross	206		206		206
Finite and indefinite lived intangible assets, accumulated amortization	(60)		(60)		(48)
Intangible assets, net carrying amount	146		146		$ 158
Amortization expense	$ (6)	$ (122)	$ (12)	$ (244)

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Intangible Assets and Goodwill - Schedule of Total Amortization Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Finite-Lived Intangible Assets [Line Items]
Amortization	$ 109	$ 225	$ 219	$ 451
Bed Licenses Included in Property and Equipment
Finite-Lived Intangible Assets [Line Items]
Amortization	103	103	207	207
Lease Rights
Finite-Lived Intangible Assets [Line Items]
Amortization	$ 6	$ 122	$ 12	$ 244

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Intangible Assets and Goodwill - Schedule of Estimated Amortization Expense for All Definite Lived Intangibles (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Total expected amortization expense	$ 146	$ 158
Bed Licenses Included in Property and Equipment
Finite-Lived Intangible Assets [Line Items]
2021	207
2022	414
2023	414
2024	414
2025	414
Thereafter	8,452
Total expected amortization expense	10,315
Lease Rights
Finite-Lived Intangible Assets [Line Items]
2021	12
2022	24
2023	23
2024	18
2025	18
Thereafter	51
Total expected amortization expense	$ 146

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Leases - Operating Leases - Additional Information (Details)	6 Months Ended
	Jun. 30, 2021 Facility
Operating Leased Assets [Line Items]
Number of SNFs under non-cancelable operating leases	9
Leased Facilities
Operating Leased Assets [Line Items]
Weighted average remaining lease term	6 years 3 months 18 days

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Leases - Schedule of Future Minimum Lease Payments (Details) $ in Thousands	Jun. 30, 2021 USD ($)
Future Rental Payments [Abstract]
2021	$ 3,336
2022	6,752
2023	6,851
2024	6,958
2025	7,095
Thereafter	12,736
Total	43,728
Accretion of Lease Liability [Abstract]
2021	(106)
2022	(591)
2023	(1,050)
2024	(1,494)
2025	(1,950)
Thereafter	(4,497)
Total	(9,688)
Operating Lease Obligation [Abstract]
2021	3,230
2022	6,161
2023	5,801
2024	5,464
2025	5,145
Thereafter	8,239
Total	$ 34,040

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Leases - Schedule of Future Minimum Lease Payments (Parenthetical) (Details)	Jun. 30, 2021	Jan. 01, 2019
Leases [Abstract]
Weighted average discount rate	7.98%	7.98%

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Leases - Facilities Leased or Subleased by the Company - Additional Information (Details)		3 Months Ended	6 Months Ended
	Jan. 01, 2021 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2021 USD ($) Facility
Operating Leased Assets [Line Items]
Lessor, operating lease, description			As of June 30, 2021, the Company leased or subleased 20 facilities (12 owned by the Company and eight leased to the Company), to third-party tenants on a triple net basis, meaning that the lessee (i.e., the third-party tenant of the property) is obligated under the lease or sublease, as applicable, for all costs of operating the property, including insurance, taxes and facility maintenance, as well as the lease or sublease payments, as applicable. The weighted average remaining lease term for our facilities is approximately 6.0 years.
Number of leased or subleased facilities | Facility			20
Number of skilled nursing facilities sub leased | Facility			8
Leased and Subleased Facilities
Operating Leased Assets [Line Items]
Weighted average remaining lease term		6 years	6 years
PS Sublease | Powder Springs
Operating Leased Assets [Line Items]
Lessor, operating lease, description			The PS Sublease will expire on August 1, 2027, subject to two five-year optional extensions.
Lease, expiration date	Aug. 01, 2027
Lessor operating lease existence of option to extend	true
Lessor, operating lease, number of optional extensions	two
Base rent equivalent percentage of adjusted EBITDAR for months seven through twenty-four	80.00%
Maximum expected base rent per month beginning with month thirteen	$ 150,000
Expected base rent per month beginning with month twenty-five	140,000
Lessor, operating lease, lease payment, terms and conditions			For the first six months, the base rent under the PS Sublease will equal the adjusted earnings before interest, tax, depreciation, amortization, and rent (“EBITDAR”) as defined in the PS Sublease, of PS Operator, to the extent derived from the Powder Springs Facility. For months seven through twenty-four, the base rent will equal 80% of the Adjusted EBITDAR (as defined in the PS Sublease); however, beginning with month thirteen, the base rent may not exceed $150,000 per month. Beginning with month twenty-five, the base rent will be $140,000 per month.
Maximum adjusted EBITDAR for counterparty to not pay any base rent	0
Conditional reimbursement of base rent to counterparty, maximum adjusted EBITDAR	0
Variable rent		$ 100,000	$ 500,000
Straight-line rent			$ 100,000
Minimum required monthly average adjusted cash flows of counterparty for non-termination of sublease	$ 100,000
Third Party Operators
Operating Leased Assets [Line Items]
Number of sublease agreements executed, owned by company | Facility			12

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Leases - Sublease Termination - Additional Information (Details) $ in Thousands	1 Months Ended	3 Months Ended	6 Months Ended	12 Months Ended
	Jan. 31, 2015 Facility	Jun. 30, 2021 USD ($) Facility	Jun. 30, 2021 USD ($) Facility	Dec. 31, 2020 USD ($)	May 14, 2021 USD ($)	Jan. 01, 2021 USD ($)
Lessee Lease Description [Line Items]
Number of facilities | Facility		24	24
Rent collected		$ 1,702	$ 1,702	$ 3,481
Wellington Lease Amendment
Lessee Lease Description [Line Items]
Number of facilities | Facility	2
Lease, expiration date	Aug. 31, 2027
Wellington Lease Termination
Lessee Lease Description [Line Items]
Transition date			Jan. 01, 2021
Bed taxes		1,700	$ 1,700			$ 1,700
Percentage of anticipated annual revenue				23.00%
Estimated allowance of rent receivable				$ 1,400
Rent receivable				$ 2,700
Rent collected		3,200	3,200
Insurance refund			200
Bed taxes paid			1,000
Collection expenses paid			100
Rent arrears in doubtful not collected			1,300
Rent arrears already collected			$ 1,400
Tara
Lessee Lease Description [Line Items]
Percentage of lease rent obligation			54.00%
Powder Springs
Lessee Lease Description [Line Items]
Variable rent recognized		$ 100	$ 500
Wellington Tenant
Lessee Lease Description [Line Items]
Cash rent					$ 1,000
Georgia | Lease Ending 2027
Lessee Lease Description [Line Items]
Number of facilities subleased | Facility		8	8

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Leases - Leased and Subleased Facilities to Third-Party Operators - Additional Information (Details) $ in Thousands					1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Aug. 27, 2020 USD ($)	Feb. 28, 2019	Jan. 28, 2019 USD ($)	Nov. 30, 2018 Facility	Feb. 28, 2021 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2020 USD ($)	Aug. 26, 2020 USD ($)	Jun. 27, 2018 bed
Variable Interest Entity, Not Primary Beneficiary | Peach Health Care | Peach Health Sublessee
Operating Leased Assets [Line Items]
Long-term LOC	$ 500											$ 1,300
Proceeds from line of credit	450
Non-cash settlement of bed taxes	$ 350
LOC fixed interest rate	8.00%											16.50%
Debt instrument, frequency of periodic payment	60 equal monthly installments
Other Revenues
Operating Leased Assets [Line Items]
Recognized in other revenues						$ 13	$ 2	$ 75	$ 9
Aspire
Operating Leased Assets [Line Items]
Number of subleased facilities | Facility				5
Operating lease indemnification liability						8,000		$ 8,000
Symmetry
Operating Leased Assets [Line Items]
Lease agreement expiration year								2030
Rent payments								$ 100	$ 100
Rent arrears payable			$ 800
Rent arrears including finance fees			$ 60
Symmetry | Other Revenues
Operating Leased Assets [Line Items]
Recognized in other revenues					$ 50					$ 10
Symmetry | Mountain Trace Facility
Operating Leased Assets [Line Items]
Number of beds in SNF | bed													106
Symmetry | Sumter Facility
Operating Leased Assets [Line Items]
Number of beds in SNF | bed													96
Symmetry | Georgetown Facility
Operating Leased Assets [Line Items]
Number of beds in SNF | bed													84
Vero Health Lease
Operating Leased Assets [Line Items]
Lease start date		Mar. 01, 2019
Peach Health Care | Variable Interest Entity, Not Primary Beneficiary | Peach Health Sublessee
Operating Leased Assets [Line Items]
Long-term LOC						$ 400		$ 400			$ 400

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Leases - Schedule of Future Minimum Lease Receivables from Company's Facilities Leased and Subleased to Third Party Tenants (Details) $ in Thousands	Jun. 30, 2021 USD ($)
Operating Leases Future Minimum Payments Receivable [Abstract]
2021	$ 6,276
2022	13,519
2023	15,477
2024	15,299
2025	13,702
Thereafter	33,555
Total	$ 97,828

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Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Payables And Accruals [Abstract]
Accrued employee benefits and payroll-related	$ 541	$ 218
Real estate and other taxes	1,257	491
Self-insured reserve	168	183
Accrued interest	284	424
Unearned rental revenue	42	41
Other accrued expenses	1,028	868
Total accrued expenses	$ 3,320	$ 2,225

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Accrued Expenses - Schedule of Accrued Expenses (Parenthetical) (Details) $ in Millions	Jun. 30, 2021 USD ($)
Healthcare Services
Payables And Accruals [Line Items]
Bed taxes	$ 0.3
Wellington Transition
Payables And Accruals [Line Items]
Bed taxes	$ 0.7

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Notes Payable and Other Debt - Summary of Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Debt instrument, outstanding amount	$ 55,494	$ 55,824
Deferred financing costs	(1,202)	(1,250)
Unamortized discount on bonds	(129)	(135)
Notes payable and other debt	54,163	54,439
Senior debt - guaranteed by HUD
Debt Instrument [Line Items]
Debt instrument, outstanding amount	30,646	31,104
Senior debt - guaranteed by USDA
Debt Instrument [Line Items]
Debt instrument, outstanding amount	13,008	13,139
Senior debt - guaranteed by SBA
Debt Instrument [Line Items]
Debt instrument, outstanding amount	615	628
Senior debt Bonds, net of discount
Debt Instrument [Line Items]
Debt instrument, outstanding amount	6,379	6,500
Senior debt - other mortgage indebtedness
Debt Instrument [Line Items]
Debt instrument, outstanding amount	3,555	3,631
Other Debt
Debt Instrument [Line Items]
Debt instrument, outstanding amount	$ 1,291	$ 822

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Notes Payable and Other Debt - Details of Long-term Debt (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Debt instrument, outstanding amount	$ 55,494	$ 55,824
Senior debt - guaranteed by HUD
Debt Instrument [Line Items]
Debt instrument, outstanding amount	30,646	31,104
Senior debt - guaranteed by USDA
Debt Instrument [Line Items]
Debt instrument, outstanding amount	13,008	13,139
Senior debt - guaranteed by SBA
Debt Instrument [Line Items]
Debt instrument, outstanding amount	615	628
Senior debt Bonds, net of discount
Debt Instrument [Line Items]
Debt instrument, outstanding amount	6,379	6,500
Senior debt - other mortgage indebtedness
Debt Instrument [Line Items]
Debt instrument, outstanding amount	3,555	3,631
Senior Debt Obligations | Senior debt - guaranteed by HUD
Debt Instrument [Line Items]
Debt instrument, outstanding amount	30,646	31,104
Senior Debt Obligations | Senior debt - guaranteed by USDA
Debt Instrument [Line Items]
Debt instrument, outstanding amount	13,008	13,139
Senior Debt Obligations | Senior debt - guaranteed by SBA
Debt Instrument [Line Items]
Debt instrument, outstanding amount	615	628
Bonds | Senior debt Bonds, net of discount
Debt Instrument [Line Items]
Debt instrument, outstanding amount	6,379	6,500
Other Debt
Debt Instrument [Line Items]
Debt instrument, outstanding amount	$ 1,291	822
Orix Real Estate Capital | The Pavilion Care Center | Senior Debt Obligations | Senior debt - guaranteed by HUD
Debt Instrument [Line Items]
Debt instrument, maturity date	Dec. 01, 2027
Fixed interest rate (as a percent)	4.16%
Debt instrument, outstanding amount	$ 925	986
Orix Real Estate Capital | Hearth And Care Of Greenfield | Senior Debt Obligations | Senior debt - guaranteed by HUD
Debt Instrument [Line Items]
Debt instrument, maturity date	Aug. 01, 2038
Fixed interest rate (as a percent)	4.20%
Debt instrument, outstanding amount	$ 1,883	1,920
Midland State Bank | Woodland Manor | Senior Debt Obligations | Senior debt - guaranteed by HUD
Debt Instrument [Line Items]
Debt instrument, maturity date	Oct. 01, 2044
Fixed interest rate (as a percent)	3.75%
Debt instrument, outstanding amount	$ 4,902	4,968
Midland State Bank | Glenvue H&R | Senior Debt Obligations | Senior debt - guaranteed by HUD
Debt Instrument [Line Items]
Debt instrument, maturity date	Oct. 01, 2044
Fixed interest rate (as a percent)	3.75%
Debt instrument, outstanding amount	$ 7,613	7,712
Midland State Bank | Georgetown Health | Senior Debt Obligations | Senior debt - guaranteed by HUD
Debt Instrument [Line Items]
Debt instrument, maturity date	Oct. 01, 2046
Fixed interest rate (as a percent)	2.98%
Debt instrument, outstanding amount	$ 3,350	3,394
KeyBank | Other Debt
Debt Instrument [Line Items]
Debt instrument, maturity date	Aug. 25, 2021
Fixed interest rate (as a percent)	0.00%
Debt instrument, outstanding amount	$ 495	495
KeyBank | Autumn Breeze | Senior Debt Obligations | Senior debt - guaranteed by HUD
Debt Instrument [Line Items]
Debt instrument, maturity date	Jan. 01, 2045
Fixed interest rate (as a percent)	3.65%
Debt instrument, outstanding amount	$ 6,617	6,705
KeyBank | Sumter Valley | Senior Debt Obligations | Senior debt - guaranteed by HUD
Debt Instrument [Line Items]
Debt instrument, maturity date	Jan. 01, 2047
Fixed interest rate (as a percent)	3.70%
Debt instrument, outstanding amount	$ 5,356	5,419
Metro City Bank | Coosa Valley Health Care | Senior Debt Obligations | Senior debt - guaranteed by USDA
Debt Instrument [Line Items]
Debt instrument, maturity date	Sep. 30, 2035
Effective interest rate (as a percent)	5.50%
Debt instrument, outstanding amount	$ 5,101	5,149
Metro City Bank | Coosa Valley Health Care | Senior Debt Obligations | Senior debt - guaranteed by USDA | Prime Rate
Debt Instrument [Line Items]
Basis spread	1.50%
Community Bank | Mountain Trace Rehab | Senior Debt Obligations | Senior debt - guaranteed by USDA
Debt Instrument [Line Items]
Debt instrument, maturity date	Dec. 24, 2036
Effective interest rate (as a percent)	5.75%
Debt instrument, outstanding amount	$ 3,914	3,972
Community Bank | Mountain Trace Rehab | Senior Debt Obligations | Senior debt - guaranteed by USDA | Prime Rate
Debt Instrument [Line Items]
Basis spread	1.75%
Cadence Bank, NA | Southland Healthcare | Senior Debt Obligations | Senior debt - guaranteed by USDA
Debt Instrument [Line Items]
Debt instrument, maturity date	Jul. 27, 2036
Effective interest rate (as a percent)	6.00%
Debt instrument, outstanding amount	$ 3,993	4,018
Cadence Bank, NA | Southland Healthcare | Senior Debt Obligations | Senior debt - guaranteed by USDA | Prime Rate
Debt Instrument [Line Items]
Basis spread	1.50%
Cadence Bank, NA | Southland Healthcare | Senior Debt Obligations | Senior debt - guaranteed by SBA
Debt Instrument [Line Items]
Debt instrument, maturity date	Jul. 27, 2036
Effective interest rate (as a percent)	5.50%
Debt instrument, outstanding amount	$ 615	628
Cadence Bank, NA | Southland Healthcare | Senior Debt Obligations | Senior debt - guaranteed by SBA | Prime Rate
Debt Instrument [Line Items]
Basis spread	2.25%
City of Springfield | Eaglewood Care Center | Bonds | Bonds Series A
Debt Instrument [Line Items]
Debt instrument, maturity date	May 01, 2042
Fixed interest rate (as a percent)	7.65%
Debt instrument, outstanding amount	$ 6,379	6,379
City of Springfield | Eaglewood Care Center | Bonds | Bond Series B
Debt Instrument [Line Items]
Debt instrument, maturity date	May 01, 2021
Fixed interest rate (as a percent)	8.50%
Debt instrument, outstanding amount		121
Exchange Bank of Alabama | Meadowood
Debt Instrument [Line Items]
Debt instrument, maturity date	May 01, 2022
Effective interest rate (as a percent)	4.50%
Exchange Bank of Alabama | Meadowood | Senior debt - other mortgage indebtedness
Debt Instrument [Line Items]
Debt instrument, outstanding amount	$ 3,555	3,631
First Insurance Funding | Other Debt
Debt Instrument [Line Items]
Debt instrument, maturity date	Mar. 01, 2022
Fixed interest rate (as a percent)	3.63%
Debt instrument, outstanding amount	$ 294	94
Servarus Financial Inc. | Other Debt
Debt Instrument [Line Items]
Debt instrument, maturity date	Nov. 01, 2021
Fixed interest rate (as a percent)	5.18%
Debt instrument, outstanding amount	$ 273
FountainHead Commercial Capital - PPP Loan
Debt Instrument [Line Items]
Debt instrument, maturity date	Apr. 16, 2022
Fixed interest rate (as a percent)	1.00%
Debt instrument, outstanding amount	$ 229	229
Marlin Covington Finance | Other Debt
Debt Instrument [Line Items]
Debt instrument, maturity date	Mar. 11, 2021
Fixed interest rate (as a percent)	20.17%
Debt instrument, outstanding amount		$ 4

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Notes Payable and Other Debt - Details of Long-term Debt (Parenthetical) (Details) $ in Millions		6 Months Ended
	May 03, 2021 USD ($)	Jun. 30, 2021 Facility bed
Senior debt - guaranteed by HUD
Debt Instrument [Line Items]
Number of skilled nursing facilities		7
Percentage of debt insured		100.00%
Senior debt - guaranteed by USDA
Debt Instrument [Line Items]
Number of skilled nursing facilities		3
Annual renewal fee for the USDA guarantee (as a percent)		0.25%
Debt Instrument Prepayment Penalties Percentage		1.00%
Prepayment penalties capped percentage		1.00%
Prepayment penalties percentage capped, period		10 years
Prepayment penalties percentage capped thereafter		0.00%
Number of licensed beds | bed		124
Senior debt - guaranteed by USDA | Coosa Valley Health Care
Debt Instrument [Line Items]
Prepayment penalties percentage capped thereafter		1.00%
Senior debt - guaranteed by SBA
Debt Instrument [Line Items]
Number of skilled nursing facilities		1
Percentage of debt insured		75.00%
Number of licensed beds | bed		126
Senior debt Bonds, net of discount
Debt Instrument [Line Items]
Amortization of deferred financing costs (in percentage)		0.01%
Bond Series B | Eaglewood Care Center | Bonds | City of Springfield
Debt Instrument [Line Items]
Repayment of debt | $	$ 0.1
Senior debt - other mortgage indebtedness
Debt Instrument [Line Items]
Amortization of deferred financing costs (in percentage)		0.30%
Minimum
Debt Instrument [Line Items]
Amortization of deferred financing costs (in percentage)		0.08%
Minimum | Senior debt - guaranteed by USDA
Debt Instrument [Line Items]
Percentage of debt insured		70.00%
Maximum
Debt Instrument [Line Items]
Amortization of deferred financing costs (in percentage)		0.53%
Maximum | Senior debt - guaranteed by USDA
Debt Instrument [Line Items]
Percentage of debt insured		80.00%

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Notes Payable and Other Debt - Additional Information (Details)	Jun. 30, 2021 credit_instrument
Debt Disclosure [Abstract]
Number of credit related instruments	17

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Notes Payable and Other Debt - Summary of the Scheduled Maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Debt Disclosure [Abstract]
2022	$ 6,400
2023	1,726
2024	1,808
2025	1,899
2026	1,994
Thereafter	41,667
Subtotal	55,494	$ 55,824
Less: unamortized discounts	(129)	(135)
Less: deferred financing costs, net	(1,202)	$ (1,250)
Total notes and other debt	$ 54,163

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Discontinued Operations - Summary of Activity of Discontinued Operations (Details) - Discontinued Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cost of services	$ 62	$ (6)	$ 75	$ 31
Net (loss) income	$ (62)	$ 6	$ (75)	$ (31)

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Discontinued Operations - Additional Information (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Discontinued Operations And Disposal Groups [Abstract]
Accounts payable	$ 2.5	$ 2.6
Accrued expenses	$ 0.7	$ 0.7

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Common and Preferred Stock - Additional Information (Details)				3 Months Ended		6 Months Ended
	Oct. 02, 2018	Oct. 01, 2018 USD ($) $ / shares	Jun. 08, 2018	Jun. 30, 2021 USD ($) $ / shares shares	Jun. 30, 2020 USD ($) $ / shares	Jun. 30, 2021 USD ($) $ / shares shares	Jun. 30, 2020 USD ($) DividendsPeriod Director $ / shares	Dec. 31, 2020 shares
Class of Stock [Line Items]
Dividends paid, common stock | $				$ 0	$ 0	$ 0	$ 0
Dividends declared, common stock				$ 0	$ 0
Preferred stock, shares outstanding | shares				2,812,000		2,812,000		2,812,000
Preferred stock, shares issued | shares				2,812,000		2,812,000		2,812,000
Series A Preferred Stock
Class of Stock [Line Items]
Dividends paid, preferred stock				$ 0	0	$ 0	$ 0
Undeclared preferred stock dividends arrears | $						$ 32,400,000	$ 32,400,000
Cumulative preferential cash dividend rate		10.875%	10.875%
Stated liquidation preference					$ 25.00		$ 25.00
Preferred stock cumulative preferential cash dividends annual rate per share		$ 2.72
Unpaid accrued dividends on preferred stock | $		$ 1,900,000					$ 2,200,000
Number of dividends period | DividendsPeriod							4
Increase of preferred stock dividend rate	12.875%	12.875%
Dividends paid, preferred stock		$ 3.20
Number of additional directors | Director							2
Preferred stock, shares outstanding | shares				2,811,535		2,811,535
Preferred stock, shares issued | shares				2,811,535		2,811,535
Redemption price per share				$ 25.00		$ 25.00

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Stock Based Compensation - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 15, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee stock options or warrants issued	$ 0	$ 0	$ 0	$ 0
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	$ 400,000		$ 400,000
Period of recognition of compensation expense			2 years
2020 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards made under employee stock option plan			0
Incentive stock options may be granted after 10th anniversary of date of Board approval	0		0
Number of securities remaining available for future issuance	210,386		210,386
2011 plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares of the company's stock that may be issued					168,950
Additional award granted			0
Maximum | 2020 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares of the company's stock that may be issued	250,000		250,000

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Stock Based Compensation - Summary of Recognized Stock Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 123	$ 12	$ 123	$ 24
Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	123	0	123	0
Employee | Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	123	0	123	0
Nonemployee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	0	12	0	24
Nonemployee | Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 0	$ 12	$ 0	$ 24

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Stock Based Compensation - Summary of Company's Restricted Stock Activity (Details) - Restricted stock shares in Thousands	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Number of Shares (000's)
Unvested at the beginning of the period (in shares) | shares	14
Granted (in shares) | shares	39
Vested (in shares) | shares	(22)
Unvested at the end of the period (in shares) | shares	31
Weighted Average Grant Date Fair Value
Unvested at the beginning of the period (in dollars per share) | $ / shares	$ 3.60
Granted (in dollars per share) | $ / shares	13.26
Vested (in dollars per share) | $ / shares	7.18
Unvested at the ending of the period (in dollars per share) | $ / shares	$ 13.26

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Commitments and Contingencies - Additional Information (Details)			3 Months Ended		6 Months Ended
	Jan. 29, 2020 USD ($)	Oct. 27, 2016 USD ($)	Jun. 30, 2020 Case	Mar. 31, 2020 credit_instrument Case	Jun. 30, 2021 USD ($) Case	Mar. 31, 2021 Case	Dec. 31, 2020 USD ($)
Loss Contingencies [Line Items]
Self-insured reserve | $					$ 168,000		$ 183,000
Accounts Payable
Loss Contingencies [Line Items]
Self-insured reserve | $					$ 100,000		$ 100,000
Pending Litigation
Loss Contingencies [Line Items]
Pending litigation			11		0
Former Patients | Pending Litigation
Loss Contingencies [Line Items]
Pending litigation			1
Pending Litigation
Loss Contingencies [Line Items]
Pending litigation					13
Current Or Prior Tenants Former Patients | Pending Litigation
Loss Contingencies [Line Items]
Pending litigation			10
Current Or Prior Tenants Former Patients | Dismissed Litigation
Loss Contingencies [Line Items]
Number of claims dismissed			1
ARKANSAS | Former Patients | Settled Litigation
Loss Contingencies [Line Items]
Number of claims settled | credit_instrument				1
Litigation settlement amount | $	$ 40,000
ARKANSAS | Pending Litigation
Loss Contingencies [Line Items]
Loss contingency claims after disposal of facilities					4
ARKANSAS | Current Or Prior Tenants Former Patients | Pending Litigation
Loss Contingencies [Line Items]
Pending litigation			2	1	1	0
Ohio | Ohio Attorney General Action | Dismissed Litigation
Loss Contingencies [Line Items]
Offer to settle claims | $		$ 1,000,000.0
Ohio | Ohio Attorney General Action | Dismissed Litigation | Minimum
Loss Contingencies [Line Items]
Damages sought per claim or falsification | $		5,000
Ohio | Ohio Attorney General Action | Dismissed Litigation | Maximum
Loss Contingencies [Line Items]
Damages sought per claim or falsification | $		$ 10,000

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Segment Results - Additional Information (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2021 USD ($) Segment	Dec. 31, 2020 USD ($)
Segment Reporting Information [Line Items]
Number of reporting segments | Segment	2
Description of primary reporting segments	i) Real Estate Services, which consists of the leasing and subleasing of long-term care and senior living facilities to third-party tenants, including the Company’s management of three facilities on behalf of third-party owners; and (ii) Healthcare Services, which consists of the operation of the Tara Facility.
Assets	$ 107,163	$ 108,025
Real Estate Services
Segment Reporting Information [Line Items]
Assets	105,700
Healthcare Services
Segment Reporting Information [Line Items]
Assets	$ 1,500

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Segment Results - Summary of Results of Operations for Reporting Segments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenues:
Rental revenues	$ 3,763	$ 4,293	$ 7,844	$ 8,590
Total revenues	6,468	4,539	13,549	9,087
Expenses:
Patient care expense	2,254	0	4,457	0
Facility rent expense	1,639	1,639	3,279	3,279
Cost of management fees	150	174	315	325
Depreciation and amortization	652	769	1,302	1,545
General and administrative expense	945	714	1,981	1,591
Doubtful accounts expense (recovery)	37	(135)	77	(137)
Other operating expenses	243	297	475	521
Total expenses	5,920	3,458	11,886	7,124
Income from operations	548	1,081	1,663	1,963
Other expense (income) :
Interest expense, net	666	684	1,353	1,399
Other expense (income), net	323	(9)	717	135
Total other expense (income), net	989	675	2,070	1,534
(Loss) income from continuing operations before income taxes	(441)	406	(407)	429
(Loss) income from continuing operations	(441)	406	(407)	429
(Loss) income from discontinued operations, net of tax	(62)	6	(75)	(31)
Net (loss) income	(503)	412	(482)	398
Real Estate Services
Revenues:
Rental revenues	3,763	4,293	7,844	8,590
Total revenues	4,023	4,539	8,414	9,087
Expenses:
Facility rent expense	1,342	1,639	2,684	3,279
Cost of management fees	150	174	315	325
Depreciation and amortization	649	769	1,297	1,545
General and administrative expense	823	714	1,722	1,591
Doubtful accounts expense (recovery)		(135)		(137)
Other operating expenses	239	297	471	521
Total expenses	3,203	3,458	6,489	7,124
Income from operations	820	1,081	1,925	1,963
Other expense (income) :
Interest expense, net	663	684	1,344	1,399
Other expense (income), net	323	(9)	717	135
Total other expense (income), net	986	675	2,061	1,534
(Loss) income from continuing operations before income taxes	(166)	406	(136)	429
(Loss) income from continuing operations	(166)	406	(136)	429
(Loss) income from discontinued operations, net of tax	(62)	6	(75)	(31)
Net (loss) income	(228)	412	(211)	398
Healthcare Services
Revenues:
Total revenues	2,445		5,135
Expenses:
Patient care expense	2,254		4,457
Facility rent expense	297		595
Depreciation and amortization	3		5
General and administrative expense	122		259
Doubtful accounts expense (recovery)	37		77
Other operating expenses	4		4
Total expenses	2,717		5,397
Income from operations	(272)		(262)
Other expense (income) :
Interest expense, net	3		9
Total other expense (income), net	3		9
(Loss) income from continuing operations before income taxes	(275)		(271)
(Loss) income from continuing operations	(275)		(271)
Net (loss) income	(275)		(271)
Patient Care Revenues
Revenues:
Patient care, management fees and other revenues	2,445	0	5,135	0
Patient Care Revenues | Healthcare Services
Revenues:
Patient care, management fees and other revenues	2,445		5,135
Management Fees
Revenues:
Patient care, management fees and other revenues	247	244	495	488
Management Fees | Real Estate Services
Revenues:
Patient care, management fees and other revenues	247	244	495	488
Other Revenues
Revenues:
Patient care, management fees and other revenues	13	2	75	9
Other Revenues | Real Estate Services
Revenues:
Patient care, management fees and other revenues	$ 13	$ 2	$ 75	$ 9

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Subsequent Events - Additional Information (Details) - USD ($) $ in Thousands	Jul. 09, 2021	Jun. 30, 2021	Dec. 31, 2020
Subsequent Event [Line Items]
Debt instrument, outstanding amount		$ 55,494	$ 55,824
FountainHead Commercial Capital - PPP Loan
Subsequent Event [Line Items]
Debt instrument, outstanding amount		$ 229	$ 229
FountainHead Commercial Capital - PPP Loan | Subsequent Event
Subsequent Event [Line Items]
Debt Instrument, forgiven	$ 200