Financial Analysis

NOTE 3. BUSINESS COMBINATION Overview Effective August 14, 2025, the Company closed on the merger with SunLink; whereas, SunLink merged with and into the Company, and the Company continuing as the surviving corporation. The primary reason for the combination was the combination of the Company and SunLink would result in the potential for a material and immediate and long-term upside to both company's current shareholders' valuation. The two companies had complimentary business lines and long-term experience of senior management provided a complimentary merger resulting in multiple business synergies. On August 5, 2025, the Company filed Articles of Amendment (the Articles of Amendment) to its Amended and Restated Articles of Incorporation with the Secretary of State of the State of Georgia to establish its Series D Preferred Stock. Pursuant to the Merger Agreement, at the effective time of the merger (the Effective Time), each five shares of common stock, no par value per share, of SunLink (SunLink common stock) issued and outstanding immediately prior to the Effective Time (other than excluded shares (as defined in the Merger Agreement)) were converted into the right to receive (i) 1.1330 validly issued, fully paid and nonassessable shares of the Company's common stock, and (ii) one validly issued, fully paid and nonassessable share of Series D Preferred Stock, no par value per share. Holders of SunLink common stock will receive cash (without interest) in lieu of fractional …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 15. 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 may be subject to future governmental review, audit, investigation and interpretation, as well as significant regulatory action, including fines, penalties and exclusion from certain governmental programs. As of December 31, 2025, the Companys facilities that are operated by the Company, leased or subleased to third-party operators, or otherwise managed by third parties were certified by the Centers for Medicare & Medicaid Services (CMS) and were operational. Because the Company operates through Healthcare Services, Pharmacy Services and Real Estate segments, regulatory exposure may arise directly from the Companys operated businesses, indirectly through tenant and operator performance at leased facilities, or from legacy matters relating to prior periods of direct operations. Based on information currently available, the Company believes that it is in compliance in all material respects with applicable laws and regulations relating to its current operations, although there can be no assurance that governmental agencies will not reach different conclusions in the future. Legal Matters The Company is party to various legal actions and administrative proceedings and is subject to various claims arising in the ordinary course of business, including claims rela …

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13. EMPLOYEE BENEFITS Defined Contribution Plan SunLink had a defined contribution plan pursuant to IRS Section 401(k) covered substantially all employees. This plan was assumed by the Company in the Merger, and it is being amended to include all the Companys employees. The Company matches a specified percentage of the employees contribution as determined periodically by its management. No match was provided for the year ended December 31, 2025. Plan expense for the defined contribution plan was $ 0 for the year ended December 31, 2025. Defined Benefit Plans Prior to 1997, SunLink maintained a defined benefit retirement plan covering substantially all of its domestic employees. Effective February 28, 1997, SunLink amended its domestic retirement plan to freeze participant benefits and closed the plan to new participants. Benefits under the frozen plan are based on years of service and level of earnings. The plan was assumed by the Company in the Merger. The Company funds the frozen plan, which is noncontributory, at a rate that meets or exceeds the minimum amounts required by the Employee Retirement Income Security Act of 1974. No defined benefit plan is currently maintained for employees of the Company. At December 31, 2025, the plans assets were invested 11 % in cash and short-term investments, 85 % in equity investments and 14 % in fixed income investments. The plans current investment policy of primarily investing in cash and short-term investments is based on the possibl …

CompensationAndEmployeeBenefitPlansTextBlock · excerpt; the full note is in the filing

NOTE 10. NOTES PAYABLE AND OTHER DEBT Notes payable and other debt consists of the following: (Amounts in 000s) December 31, 2025 December 31, 2024 Senior debtguaranteed by HUD $ 27,281 $ 28,146 Senior debtguaranteed by USDA (1) 6,575 6,988 Senior debtguaranteed by SBA (2) 509 533 Senior debtbonds 5,811 5,970 Senior debtother mortgage indebtedness 2,979 7,728 Other debt 805 1,349 Subtotal 43,960 50,714 Deferred financing costs ( 706 ) ( 886 ) Unamortized discount on bonds ( 101 ) ( 107 ) Notes payable and other debt $ 43,153 $ 49,721 (1) U.S. Department of Agriculture (USDA) (2) U.S. Small Business Administration (SBA) The following is a detailed listing of the debt facilities that comprise each of the above categories: (Amounts in 000s) Facility Lender Maturity Interest Rate (1) December 31, 2025 December 31, 2024 Senior debt - guaranteed by HUD (2) The Pavilion Care Center Newpoint Capital 12/01/2039 Fixed 3.97 % $ 727 $ 765 Hearth and Care of Greenfield Newpoint Capital 08/01/2050 Fixed 3.97 % 1,825 1,868 Woodland Manor Newpoint Capital 11/01/2052 Fixed 3.97 % 4,703 4,799 Glenvue Newpoint Capital 10/01/2044 Fixed 3.75 % 6,611 6,849 Autumn_Breeze KeyBank 01/01/2045 Fixed 3.65 % 5,751 5,956 Georgetown Newpoint Capital 10/01/2046 Fixed 2.98 % 2,923 3,023 Sumter Valley KeyBank 01/01/2047 Fixed 3.70 % 4,741 4,886 Total 27,281 28,146 Senior debt - guaranteed by USDA (3) Mountain Trace Community B&T 12/24/2036 Prime + 1.75 % 8.50 % 3,193 3,423 Southland Cadence Bank, NA 07/27 …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

"NOTE 14. STOCK BASED COMPENSATION Stock Incentive Plans On September 21, 2023 (the Effective Date), our Board of Directors (the ""Board"") approved the Regional Health Properties, Inc. 2023 Omnibus Incentive Compensation Plan (the 2023 Plan), which was approved by the Company's shareholders on November 16, 2023 at the 2023 Annual Meeting of Shareholders. The 2023 Plan authorizes the Compensation Committee of the Board of the Company to grant awards to non-employee directors, employees (including executive officers) and consultants. Under the terms of the 2023 Plan, the maximum number of shares of common stock reserved for delivery in settlement of awards shall be an aggregate of 225,000 shares of our common stock and grants are subject to certain limitations. The 2023 Plan permits the grant of any or all of the following types of awards to grantees: (i) stock options, including non-qualified options and incentive stock options; (ii) stock appreciation rights; (iii) restricted shares; (iv) performance units; (v) performance shares; (vi) deferred stock; (vii) restricted stock units; (viii) dividend equivalents; and (vii) other stock-based awards. The 2023 Plan shall remain in effect, subject to the right of the Board to amend or terminate the 2023 Plan at any time, until the earlier of 11:59 p.m. (ET) on September 21, 2033, or the date all shares subject to the 2023 Plan shall have been issued and the restrictions on all restricted shares granted under the Plan shall have laps …

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NOTE 7. INTANGIBLE ASSETS AND GOODWILL Intangible assets consist of the following: (Amounts in 000s) Bed Licenses - Non-Separable (1) Bed Licenses - Separable (2) Lease Rights Pharmacy Intangibles Total Pharmacy Intangibles - Trade Name (2) Goodwill (2) Balances, December 31, 2024 Gross $ 14,276 $ 2,471 $ 176 $- $ 16,923 $- $ 1,585 Accumulated amortization ( 5,411 ) ( 107 ) - ( 5,518 ) - Net carrying amount, December 31, 2024 $ 8,865 $ 2,471 $ 69 $- $ 11,405 $- $ 1,585 Balances, December 31, 2025 Gross $ 11,796 $ 2,471 $ 176 $ 1,430 $ 15,873 $ 740 $ 1,585 Accumulated amortization ( 4,880 ) ( 124 ) ( 33 ) ( 5,037 ) - Net carrying amount, December 31, 2025 $ 6,916 $ 2,471 $ 52 $ 1,397 $ 10,836 $ 740 $ 1,585 (1) Non-separable bed licenses are included in property and equipment as is the related accumulated amortization expense ( see Note 5 Property and Equipment ). (2) The Company does not amortize indefinite-lived intangibles, which consist of separable bed licenses, trade name, and goodwill. 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) Pharmacy Intangibles Bed Licenses Lease Rights 2026 88 $ 352 $ 18 2027 88 352 18 2028 88 352 16 2029 88 352 2030 88 352 Thereafter 959 5,156 Total $ 1,397 $ 6,916 $ 52 …

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NOTE 16. INCOME TAXES At December 31, 2025 and 2024, the tax effect of significant temporary differences representing deferred tax assets and liabilities are as follows: Year Ended December 31, (Amounts in 000's) 2025 2024 Net deferred tax asset (liability): Allowance for credit loss $ 110 $ 34 Accrued expenses 173 169 Operating leases 63 77 Net operating loss carry forwards 22,856 22,566 Property, equipment & intangibles ( 3,465 ) ( 3,618 ) Stock based compensation 159 212 Self-Insurance Reserve ( 7 ) 6 Interest Expense 1,787 1,831 Total deferred tax assets 21,676 21,277 Valuation allowance ( 21,676 ) ( 21,277 ) Net deferred tax liability $ $ At December 31, 2025 the total tax expense is as follows: Year Ended December 31, 2025 Current tax expense (benefit) State $ 108 Federal Deferred tax expense (benefit) Federal Total tax expense $ 108 The items accounting for the differences between income taxes computed at the federal statutory rate and the provision for income taxes are as follows: Year Ended December 31, 2025 2024 Federal income tax at statutory rate 21.0 % 21.0 % State and local taxes 3.3 % ( 1.5 )% Nondeductible expenses Change in valuation allowance ( 21.0 )% ( 17.9 )% Other ( 1.6 )% Effective tax rate 3.3 % % Year Ended December 31, 2025 Federal income tax at statutory rate $ 291 State and local taxes 108 Consolidated VIE LLC Nondeductible expenses ( 399 ) Change in valuation allowance Deferred Tax Adjustments - NOL Expirations 108 Other Effective tax $ 108 As …

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Recently Adopted Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires a public company to disclose information about their reportable segments significant expenses and other segment items on an interim and annual basis. A public company with a single reportable segment is required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption of ASU 2023-07 did not have a material impact on the Company's consolidated financial statements. See Note 11 Segment Results for more information. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires a public company, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 effective January 1, 2025. The adoption of ASU-2023-09 did not have a material impact on the Company's consolidated financial sta …

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"NOTE 11. SEGMENT RESULTS The chief operating decision maker (CODM) is the President and Chief Executive Officer. The Company represents three reportable segments, based on how its CODM evaluates the business and allocates resources. The CODM assesses performance for the Company and decides how to allocate resources based o n each segments Income (Loss) From Operations (""Operating Income""). The CODM uses Operating Income to evaluate the performance of each segment in deciding whether to reinvest profits into the segment. The CODM evaluates performance based on Operating Income, as noted in the table below. The Company reports segment information based on the ""significant expense principle defined in ASC 280, Segment Reporting along with other segment items, which is the difference between segment revenue and less segment expenses disclosed under the significant expense principle for each reported measure of segment profit or loss. The Company has three 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, (ii) Healthcare Services, which consists of the operation of the Glenvue, Meadowood, Georgetown, Sumter, Southland, and Mountain Trace facilities and (iii) Pharmacy Service Segment, which consists of four operational areas, retail pharmacy products and services, institutional pharmacy services, which consists of specialty and non-specialty pharmaceutical and …

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"NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Regional Health Properties, Inc. is a healthcare company that owns, operates and invests in healthcare real estate and operating businesses focused on long-term care, senior housing and pharmacy services. Historically, the Company operated primarily as a healthcare real estate platform that leased skilled nursing and senior housing facilities to third-party operators under long-term triple-net lease arrangements. Over time, and particularly following recent strategic initiatives and acquisitions, the Company has evolved toward a more integrated healthcare operating model that combines healthcare real estate ownership with the direct operation of healthcare facilities and related healthcare services. Through its subsidiaries, the Company owns and operates skilled nursing and senior housing communities that provide a range of healthcare and residential services, including sub-acute and post-acute skilled nursing care, intermediate nursing care, rehabilitative therapy, memory care, Alzheimers and dementia care and senior living services. In addition to operating healthcare facilities, the Company owns healthcare real estate that is leased to third-party operators pursuant to triple-net lease arrangements. As part of the SunLink merger described below, the Company also acquired a pharmacy business located in Crowley, Louisiana that provides retail pharmacy services, institutional pharmacy services and dur …

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NOTE 17. SUBSEQUENT EVENTS The Company has evaluated all subsequent events through the date the consolidated financial statements were issued and filed with the SEC. The following is a summary of the material subsequent events. On January 5, 2026, the Company's shareholders approved the Regional Health Properties, Inc. Amended and Restated 2023 Omnibus Incentive Compensation Plan (the A&R Plan), which was approved by our Board unanimously, subject to approval of the A&R Plan by our shareholders, on November 25, 2025. The A&R Plan (i) increased the number shares of our common stock authorized for issuance under the A&R Plan by 550,000 shares, which increased the total number of authorized shares available for issuance under the 2023 Plan from 225,000 to 775,000 and (ii) increased the number of share of our common stock that may be issued pursuant to incentive stock options under the A&R Plan from 225,000 to 775,000 . As of January 14th, 2026, the Company has repurchased an additional 30,232 shares of its Series B Preferred Stock for a cost of $ 184,677 . On February 1, 2026, we terminated the lease with C-Ross for the Autumn Breeze facility. We have subsequently entered into a management agreement with CJM Advisors to provide day-to-day management services. On February 27, 2026, the Company entered into a second amendment of the Forbearance Agreement. The new expiration date is February 1, 2027. …

SubsequentEventsTextBlock · excerpt; the full note is in the filing