UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2025

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from to

Commission file number 001-33135

Regional Health Properties, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number including area code (678) 869-5116

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

N.A.

Securities registered under Section 12(g) of the Exchange Act: Common Stock, no par value (OTCQB: RHEP); Series A Redeemable Preferred Stock, no par value (OTCQB:RHEPA), Series D Redeemable Preferred Stock, no par value (OTCQB:RHEPZ)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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.

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.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

The aggregate market value of Regional Health Properties, Inc.’s common stock, no par value, held by non-affiliates as of June 30, 2025, the last business day of Regional Health Properties, Inc.’s most recently completed second fiscal quarter was $4,544,796. The number of shares of Regional Health Properties, Inc., common stock, no par value, outstanding as of March 10, 2026, was 3,934,667.

Regional Health Properties, Inc.

Form 10-K

Table of Contents

Statement Regarding Forward-Looking Statements

Certain statements in this Annual Report on Form 10-K (this “Annual Report”) contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that do not relate to historical or current facts or matters are forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding our expected future financial position, results of operations, cash flows, liquidity, capital resources, financing and refinancing plans, strategic and business plans, acquisition and disposition opportunities, segment performance, tenant and operator performance, projected expenses and capital expenditures, competitive position, integration of acquired businesses, and compliance with, and changes in, governmental regulations. You can identify some of the forward-looking statements by the use of words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “should,” “may,” “will,” “could,” “seek” and similar expressions, although not all forward-looking statements contain these identifying words.

Our actual results may differ materially from those projected or contemplated by our forward-looking statements as a result of various factors, including, among others, the following:

We urge you to carefully consider these risks and review the additional disclosures we make concerning risks and other factors that may materially affect the outcome of our forward-looking statements and our future business and operating results, including those made in Part I, Item 1A, “Risk Factors,” of this Annual Report, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission (“SEC”), including subsequent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

We caution you that any forward-looking statements made in this Annual Report are not guarantees of future performance, events or results, and you should not place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report. We do not intend, and we undertake no obligation, to update any forward-looking statement to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events, unless required by law.

PART I.

Item 1. Business

Description of Business

In this Annual Report, except as the context suggests otherwise, the words “Regional Health” or “Regional” refer to Regional Health Properties, Inc., a Georgia corporation, and the words “Company,” “we,” “our,” and “us” refer to Regional Health and its subsidiaries.

Regional Health Properties 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, Regional 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.

In August 2025, Regional completed the merger with SunLink Health Systems, Inc. (“SunLink”), a Georgia corporation. SunLink merged with and into Regional Health, with Regional Health continuing as the surviving corporation (the “Merger”). The Merger expanded Regional’s operating platform and accelerated the Company’s transition toward a vertically integrated healthcare services model. As a result, Regional today participates more directly in the ownership, operation and improvement of healthcare facilities than it did historically, while still retaining a real estate segment that includes leased assets.

Through its subsidiaries, Regional 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, Alzheimer’s 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. Regional believes its ability to operate facilities directly, while also owning and selectively leasing healthcare real estate, provides the Company with greater flexibility in capital allocation, operator selection and asset repositioning.

As part of the SunLink merger, Regional also acquired a pharmacy business located in Crowley, Louisiana that provides retail pharmacy services, institutional pharmacy services and durable medical equipment. The pharmacy business expands Regional’s participation across the care continuum and provides the Company with additional operating capabilities that complement its healthcare facility operations, particularly in long-term care and senior services settings.

Regional currently operates across six states, with the majority of its facilities located in the Southeastern United States. The Company believes this geographic footprint provides access to attractive demographic markets, including states with growing senior populations, favorable long-term demand trends for healthcare services and opportunities to acquire underperforming assets at valuations that may support attractive turnaround returns.

Regional operates through three reportable segments: Healthcare Services, which consists of the operation of skilled nursing and senior housing communities; Pharmacy Services, which consists of retail and institutional pharmacy services and durable medical equipment; and Real Estate, which consists of leasing and subleasing healthcare properties to third-party tenants. These segments together reflect Regional’s evolution from a healthcare landlord into a more diversified owner-operator with both real estate and operating capabilities.

Our Company

Regional Health is the successor to AdCare Health Systems, Inc. On September 29, 2017, AdCare merged with and into Regional Health, with Regional Health continuing as the surviving corporation. Since that time, and particularly following the SunLink merger, the Company has continued to refine its strategic focus on healthcare assets where ownership, operations and disciplined capital deployment can be combined to create long-term value.

Our principal executive offices are located at 1050 Crown Pointe Parkway, Suite 720, Atlanta, Georgia 30338 and our telephone number is (678) 869-5116. We maintain a website at www.regionalhealthproperties.com. We make

available free of charge on our website certain of our SEC filings as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission. The contents of our website are not incorporated by reference into this Annual Report.

Certain corporate governance materials, including our Board of Directors (the “Board”) committee charters and our Code of Business Conduct and Ethics, are posted on our website under the heading “Investor Relations” and then “Committee Charters.” From time to time, the corporate governance materials on our website may be updated as necessary to comply with rules issued by the SEC or Over-the Counter Market Groups ("OTC") or as desirable to further the continued effective and efficient governance of our company.

Industry Trends

Demand for skilled nursing and senior housing services continues to be shaped by powerful demographic, clinical and economic trends. The U.S. population is aging, life expectancy remains elevated relative to prior decades and the number of individuals reaching ages associated with higher healthcare utilization continues to grow. As the population age 65 and older increases, demand is expected to rise for services that address chronic conditions, post-acute recovery needs, memory-related conditions and assistance with activities of daily living. These trends support long-term demand for skilled nursing facilities, assisted living communities, memory care communities and related healthcare services.

Skilled nursing facilities occupy an important role in the healthcare continuum by providing post-acute rehabilitation and higher-acuity long-term care services for patients transitioning from hospitals and other acute care settings. Hospitals, payors and policymakers continue to focus on lowering overall healthcare system costs and improving clinical outcomes, which has contributed to an ongoing shift of certain patient populations into lower-cost post-acute settings. Skilled nursing facilities that can manage higher-acuity residents efficiently, maintain strong clinical standards and coordinate care effectively may be positioned to benefit from this trend.

At the same time, the skilled nursing industry remains highly fragmented and is comprised primarily of numerous local and regional operators. This fragmentation may create opportunities for consolidation, recapitalizations and strategic acquisitions. Many facilities operate with constrained access to capital, uneven management depth or limited operational infrastructure. Regional believes these characteristics create opportunities to acquire facilities that require operational turnaround, repositioning or recapitalization and to improve their performance through stronger management, better clinical oversight, disciplined cost control and targeted capital investment.

The industry also continues to be influenced by reimbursement dynamics under Medicare and Medicaid. Skilled nursing operators remain sensitive to changes in reimbursement methodologies, annual payment updates, staffing mandates and survey enforcement activity. At the same time, high-quality operators that are able to manage labor efficiently, improve facility census and payor mix and maintain regulatory compliance may create meaningful value through better operating margins and improved asset quality. Regional believes its operating orientation positions it to evaluate facilities not only as real estate investments, but also as businesses whose performance can be enhanced through direct operational intervention.

Senior housing and memory care demand are also expected to benefit from demographic trends, particularly as the number of seniors requiring supportive care or specialized dementia care increases over time. Families are increasingly seeking professional care alternatives due to geographic mobility, smaller household sizes and the complexity of caring for aging relatives with medical or cognitive conditions. Regional believes these trends support long-term demand across multiple healthcare facility types and provide opportunities to build a more diversified operating portfolio over time.

Another important industry trend is the widening performance gap between stronger and weaker operators. Facilities with experienced leadership, sound staffing practices, effective revenue cycle management and strong referral relationships have generally performed better than facilities lacking those capabilities. Regional believes this environment favors companies that can identify underperforming facilities, install stronger operating disciplines and unlock value through operational turnaround. In Regional’s view, ownership combined with operational control may

offer a more direct path to value creation than a purely passive leasing strategy in markets where asset-level performance depends heavily on execution.

Our Real Estate Portfolio

Regional maintains a geographically diversified portfolio of healthcare investments across the Southeastern United States, including skilled nursing facilities and senior housing communities. As of December 31, 2025, the Company had investments of approximately $59.9 million in healthcare real estate facilities. Some of these facilities are operated directly by the Company or its subsidiaries, while others are leased or subleased to third-party operators. Regional’s portfolio reflects its hybrid model of direct operations, select leases and strategic capital deployment into healthcare assets where the Company believes it can create value over time.

Skilled Nursing Facilities

Skilled nursing facilities ("SNF") provide daily nursing care, rehabilitation services, social services, dietary services, medication management and assistance with activities of daily living for residents who require ongoing medical oversight or post-acute recovery services. Skilled nursing facilities generally serve individuals with more acute medical needs than traditional senior housing communities and often depend on effective clinical management, labor oversight and reimbursement execution to achieve stable performance.

Independent Living Communities

Independent living communities are age-restricted residential communities designed for seniors who are able to live independently but prefer the security, convenience and social setting of community living. These communities typically offer lifestyle services and limited support services for residents who do not require a high level of daily care.

Assisted Living Facilities

Assisted living facilities provide assistance with activities of daily living while allowing residents to maintain a degree of independence. Services commonly include meals, housekeeping, medication reminders, personal care support and other services that help residents live in a supportive residential setting.

Memory Care Communities

Memory care communities provide specialized care for individuals suffering from Alzheimer’s disease and other forms of dementia. These communities typically operate in a more secure setting and offer staff, programming and care plans specifically designed to address cognitive impairment and memory loss.

Portfolio of Healthcare Investments

As of December 31, 2025, our portfolio consists of twelve facilities consisting of nine owned SNFs, one leased SNF and two owned senior housing communities located across the Southeast U.S.

The following table provides summary information regarding the number licensed beds/units by state and property type as of December 31, 2025:

For a more detailed discussion, see Part I, Item 2, – "Properties" and “Portfolio of Healthcare Investments” in Part I, Item 1., “Business”, in this Annual Report.

Acquisitions and Dispositions

Facility Sale. On November 3, 2025, the Company sold the Coosa Valley facility located in Glencoe, Alabama for $10.6 million.

Leasing Transactions

Lease Termination. In November 2024, the Company and Vero Health X, LLC (“Vero”) entered into a Lease Termination Agreement (the “Lease Termination Agreement”) relating to the lease of Mountain Trace Rehabilitation

and Nursing Center. In March 2025, the Company and Oak Hollow Health Management entered into a Lease Termination Agreement for the Georgetown and Sumter facilities.

Leasing Transactions. As of the filing date of this Annual Report, the Company is operating or has leased or subleased, as applicable, the following facilities to tenants:

For a detailed description of each of the Company’s leases, see Note 8 - Leases to our audited consolidated financial statements included in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report.

Competitive Strengths

Integrated Owner-Operator Model

We believe our owner-operator model is a competitive strength. As Regional has migrated from a healthcare landlord model toward a more integrated owner-operator structure, the Company has gained greater ability to influence clinical quality, labor management, census development, expense control and revenue cycle performance at the facility level. This capability may allow Regional to respond more quickly to underperformance, execute turnaround initiatives and better align capital allocation with operational priorities.

Dual Real Estate and Operating Perspective

Unlike a purely passive real estate owner, Regional increasingly evaluates assets through both a real estate lens and an operating lens. This dual perspective enhances the Company’s ability to identify facilities where value can be created through operational improvement, strategic repositioning or a change in management approach.

Experienced Management Team and Industry Relationships

Regional believes its management team and network of industry relationships represent meaningful competitive advantages. The Company’s leadership has experience with healthcare operations, healthcare real estate, operator evaluation and transaction execution. This experience supports Regional’s ability to identify underperforming or undercapitalized facilities that may not meet the acquisition criteria of larger institutional investors, but that may present attractive value-creation opportunities if operated more effectively.

Strategic Flexibility Across Segments

Because the Company operates through Healthcare Services, Pharmacy Services and Real Estate segments, we can evaluate opportunities under multiple structures, including direct operations, leased real estate, subleases, management arrangements or combinations thereof. This flexibility may allow Regional to tailor the structure of a transaction to the needs of the asset and to Regional’s view of where the best long-term return can be generated.

Market Focus and Turnaround Opportunity Set

Regional also believes that its portfolio composition and market focus provide advantages. The Company’s facilities are primarily located in the Southeast and related markets where demographic trends support growing healthcare demand and where there may be opportunities to acquire facilities at valuations that allow for operational improvements to create equity value. In addition, the Company believes its smaller scale may be an advantage in select transactions, particularly where hands-on oversight, operating focus and flexibility are more important than broad institutional scale.

Business Strategy

Our business strategy focuses on expanding and improving our healthcare platform through a combination of real estate investment, facility operations and targeted acquisitions. While Regional continues to own and selectively lease healthcare real estate, the Company’s strategy increasingly emphasizes acquiring and operating facilities where operational improvement can create meaningful equity value over time.

A central element of Regional’s strategy is to identify healthcare facilities that may be operationally underperforming, undercapitalized or otherwise in need of a turnaround. These facilities may have unrealized value due to poor occupancy, weak labor management, inadequate revenue cycle execution, inconsistent clinical oversight or lack of strategic investment. Regional seeks to acquire such facilities at valuations that reflect their current underperformance and then improve the underlying business through stronger management, disciplined execution, targeted capital improvements and closer alignment between ownership and operations.

Regional believes that successful turnaround execution can create equity value in the facility beyond what would be achievable through a passive leasing model alone. By improving census, strengthening payor mix, managing labor more effectively, enhancing quality outcomes and restoring operational stability, the Company seeks to increase both cash flow and the underlying value of the facility asset. In this respect, Regional’s strategy is not limited to collecting rent or holding healthcare real estate, but instead focuses on creating value through active ownership and operational improvement.

In pursuing this strategy, Regional intends to continue to evaluate opportunities across skilled nursing, senior housing and related healthcare service lines. The Company may also invest additional capital in its current portfolio where it believes facility improvements, renovations, repositioning or operational support can produce attractive returns. Regional expects to remain disciplined in selecting assets where it believes the combination of purchase price, market conditions and operational upside creates a favorable risk-adjusted opportunity.

Regional also intends to leverage its pharmacy and healthcare operating capabilities where appropriate to support facility performance and strengthen its overall healthcare platform. Over time, the Company believes that ownership of complementary healthcare service businesses may improve coordination across the care continuum and enhance the Company’s understanding of facility operations and patient needs.

Although Regional may continue to utilize lease structures and relationships with third-party operators in certain circumstances, the Company’s strategic direction increasingly reflects a preference for opportunities where operational control, turnaround execution and asset-level improvement can drive long-term shareholder value. Regional believes this strategy differentiates the Company from traditional healthcare landlords and positions it to pursue value creation opportunities in a fragmented and operationally intensive sector.

Competition

We compete for healthcare real estate investments, operating platforms and acquisition opportunities with publicly traded, private and non-listed healthcare real estate investment trusts, real estate partnerships, healthcare providers, healthcare lenders and other investors, including developers, banks, insurance companies, pension funds, government-sponsored entities and private equity firms, some of which may have greater financial resources, broader market presence and lower costs of capital than we do. Increased competition may affect our ability to identify and

successfully pursue opportunities that meet our investment and return criteria, negotiate acceptable transaction terms and obtain financing on favorable terms.

As Regional has evolved from a primarily healthcare real estate platform into a more integrated owner-operator, we increasingly compete not only for real estate investments, but also for facilities, operating businesses and turnaround opportunities where value can be created through operational improvement. In this regard, we compete with other buyers, operators and investors seeking to acquire underperforming, undercapitalized or transitional healthcare facilities and improve their performance through stronger management, clinical oversight, labor management, revenue cycle execution, census growth and targeted capital investment. Our ability to compete successfully for these opportunities depends on, among other things, our reputation, transaction execution capabilities, access to capital, knowledge of local markets and our ability to identify and underwrite operational upside.

Our operating results also depend on the competitive environment in the local and regional markets in which our facilities operate. Through our Healthcare Services segment, we compete directly with other healthcare operating companies that provide comparable skilled nursing, senior housing, memory care, rehabilitative and related healthcare services. Through our Real Estate segment, the performance of our leased and subleased properties depends in substantial part on the ability of our tenants to compete successfully in those same markets. Through our Pharmacy Services segment, we compete with retail, institutional and long-term care pharmacy providers that furnish pharmaceutical products, related services and durable medical equipment to residents, patients and healthcare facilities.

Our facilities, and those operated by our tenants, compete to attract and retain residents and patients based on a number of factors, including quality of care, reputation, clinical outcomes, staffing levels, scope of services offered, physical condition and appearance of the property, location, price, payor mix, hospital and physician referral relationships, discharge planning relationships, family preferences and the ability to provide specialized services or higher-acuity care. In addition, we and our competitors compete for qualified personnel, including nurses, therapists, administrators, pharmacists and other caregivers. Competition for labor may increase wage rates, contract labor costs and employee benefit costs, and may affect staffing stability and quality of care.

Our competitive position, and that of our tenants, is also affected by changes in Medicare and Medicaid reimbursement methodologies, Medicare Advantage utilization trends, staffing mandates, survey enforcement activity and other healthcare laws and regulations. Operators and facilities that are able to maintain strong clinical performance, regulatory compliance, cost discipline and referral relationships may be better positioned to compete effectively, while facilities with weaker operating performance may be more vulnerable to occupancy pressure, reimbursement pressure, margin compression and loss of referrals. We believe our increasingly integrated owner-operator model, combined with our dual real estate and operating perspective, positions us to compete for opportunities where active ownership and operational improvement can create long-term value.

Revenue Sources and Recognition

Patient Care Revenue. Revenue is recognized in a way that reflects the consideration a company expects to receive in exchange for such goods and services. Revenue from the Healthcare Services segment is derived from services rendered to patients. The Company receives payments from the following sources for services rendered in our facilities: (i) the federal government under the Medicare program administered by the Centers for Medicare and Medicaid Services ("CMS"); (ii) state governments under their respective Medicaid and similar programs; (iii) commercial insurers; and (iv) individual patients and clients. A large portion 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 according to 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, such as providing room and board, wound care, intravenous drug therapy, physical therapy, and quality of life activities amongst others, are determined based on the nature of the services

provided and revenue is recognized as those performance obligations are satisfied. Estimated uncollectible amounts due from patients are generally considered implicit price concessions that directly reduce net patient care revenues.

Pharmacy Services Revenue. The Company recognizes revenue in the Pharmacy Services segment by providing pharmacy goods and services to patients. This revenue is recognized on the date goods and services are provided to at amounts billable to individual patients, adjusted for estimates for variable consideration. Each prescription claim represents a separate performance obligation of the Company, separate and distinct from other prescription claims under customer arrangements. Significant portions of the revenue from sales of pharmaceutical and medical products are reimbursed by the federal Medicare Part D program and, to a lesser extent, state Medicaid programs. The Company monitors its revenues and receivables from these reimbursement sources, as well as other third-party insurance payors, and reduces revenue on the revenue recognition date, to properly account for the variable consideration arising from anticipated differences between billed and reimbursed amounts. Accordingly, total net revenues and receivables reported in the Company’s consolidated financial statements of the Pharmacy Services Segment reflect the amount we ultimately expect to receive from these payors.

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 reasonably assured. 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 other assets 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 will be recognized only upon cash collection, and any accumulated straight-line rent receivable will be expensed in the period in which the Company first deems rent collection no longer reasonably assured.

Allowances. The Company assesses the collectability of our rent receivables, including straight-line rent receivables and working capital loans to tenants based 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 the Company is unlikely to receive the rent payments or payments on a working capital loan, 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. If the Company changes its assumptions or estimates regarding the collectability of future rent payments required by a lease or interest required from a working capital loan to a tenant, the Company may adjust its reserve to increase or reduce the rental or interest revenue recognized in the period the Company makes such change in its assumptions or estimates. The Company has reserved for approximately 1.5% of these patient care receivables based on accepted industry standards.

As of December 31, 2025, and December 31, 2024, the Company reserved for approximately $0.8 million and $0.1 million, respectively, of uncollected receivables. Accounts receivable, net totaled $7.9 million at December 31, 2025 compared with $3.4 million at December 31, 2024.

Government Regulation

The healthcare industry is subject to extensive federal, state and local regulation and frequent legislative and regulatory change. The Company’s Healthcare Services segment and the operators of the facilities owned by the Company must comply with numerous laws and regulations governing the operation of healthcare facilities and the delivery of healthcare services. These laws regulate, among other things, facility licensure and certification, participation in Medicare and Medicaid programs, quality of care standards, staffing requirements, reimbursement practices, pharmaceutical distribution, medical recordkeeping, patient rights, fire and safety standards, building codes and environmental protection.

Governmental agencies responsible for oversight of healthcare providers include the U.S. Department of Health and Human Services, the Centers for Medicare and Medicaid Services, the Office of Inspector General, the Department of Justice, the U.S. Drug Enforcement Administration, state departments of health and various state licensing boards. These agencies regularly conduct inspections, surveys, audits and investigations to ensure compliance with applicable laws and regulations. Failure on the part of operators of our facilities, or the Company with respect to facilities we operate, to comply with these laws and regulations could result in sanctions including civil monetary penalties, criminal penalties, denial of reimbursement, suspension or revocation of licenses, exclusion from participation in government healthcare programs or facility closure.

Skilled Nursing Facilities

Skilled nursing facilities are subject to extensive federal, state and local laws and regulations governing the provision of healthcare services. Facilities that participate in the Medicare and Medicaid programs must comply with detailed conditions of participation established by the Centers for Medicare and Medicaid Services. These conditions of participation address numerous aspects of facility operations including quality of care standards, resident rights, staffing requirements, infection control procedures, clinical documentation, pharmaceutical services, dietary services, medical recordkeeping and the physical condition and safety of the facility.

Facilities are subject to periodic inspections, commonly referred to as surveys, conducted by state survey agencies on behalf of CMS to determine compliance with federal requirements. Survey results may lead to deficiency citations and that require corrective action. If a facility fails to correct identified deficiencies regulators may impose sanctions including civil monetary penalties, denial of payment for new admissions, directed plans of correction, temporary management or termination from participation in the Medicare and Medicaid programs.
 

Medicare Reimbursement

Medicare is a federal health insurance program that provides coverage for individuals aged 65 and older, certain disabled individuals and individuals with end-stage renal disease. Skilled nursing facilities are reimbursed under a prospective payment system known as the Skilled Nursing Facility Prospective Payment System.

The SNF prospective payment system includes a case mix classification methodology referred to as the Patient Driven Payment Model. The Patient Driven Payment Model classifies residents into payment groups based on clinical diagnoses, functional status and other patient characteristics rather than the volume of therapy services provided. The model utilizes several payment components adjusted for the case mix, including physical therapy, occupational therapy, speech language pathology services, nursing services and non therapy ancillary services, along with a non case mix component that covers certain facility level costs.

Payment rates for skilled nursing facilities are updated annually through rulemaking issued by CMS. These annual rules typically incorporate market basket adjustments intended to reflect inflation in the cost of providing care, productivity adjustments required under federal law and other policy changes affecting reimbursement. For example, CMS periodically updates payment policies, case mix weights and quality reporting requirements through the annual SNF payment rulemaking process.

 

CMS also administers the Skilled Nursing Facility Value Based Purchasing Program under which a portion of Medicare payments may be withheld and redistributed based on a facility’s performance on quality measures including hospital readmission rates. In addition, CMS administers the Skilled Nursing Facility Quality Reporting Program which requires facilities to report specified quality data to CMS or face reductions in Medicare reimbursement. These programs are designed to link reimbursement levels more closely with patient outcomes and quality of care.

Medicaid Reimbursement

Medicaid is a joint federal and state healthcare program that provides coverage for individuals with limited financial resources. Medicaid programs are administered by individual states in accordance with federally approved state plans and reimbursement methodologies vary significantly by state. Most states reimburse nursing facilities under prospective payment systems that establish daily reimbursement rates based on resident acuity levels, facility costs, wage indexes or other factors determined by state Medicaid agencies.

Because Medicaid programs are jointly funded by federal and state governments reimbursement levels are influenced by state budget constraints and federal funding policies. State legislatures periodically modify Medicaid reimbursement methodologies, eligibility standards and program funding levels. Changes in federal funding levels, including policies affecting the federal medical assistance percentage, may also affect state reimbursement policies.

States may also provide supplemental Medicaid payments or other funding mechanisms to support providers facing increases in operating costs, including labor expenses associated with workforce shortages. However, there can be no assurance that such supplemental payments will continue or that reimbursement increases will keep pace with increases in operating costs.

Federal and state policymakers have increasingly focused on expanding home and community based services as alternatives to institutional long term care. These policy initiatives could affect demand for skilled nursing facility services and may influence future Medicaid reimbursement policies.

Minimum Staffing Standards

Federal and state regulators have increased oversight of staffing levels and quality of care in nursing homes. In April 2024 CMS issued a final rule establishing new minimum staffing standards for long term care facilities as well as new reporting requirements related to Medicaid institutional payment transparency. The rule included requirements relating to minimum nurse staffing hours per resident day and expanded registered nurse coverage requirements.

The implementation and enforcement of these staffing requirements has been subject to legislative and regulatory developments. Federal legislation enacted in 2025 delayed the implementation of certain staffing requirements and subsequent regulatory actions modified portions of the original rule. Despite these developments policymakers continue to evaluate staffing standards and workforce requirements for nursing facilities.

Compliance with staffing regulations may significantly increase labor costs for facility operators particularly in an environment characterized by shortages of nurses and other healthcare professionals. Because government reimbursement programs may not increase payment rates sufficiently to offset these additional costs staffing requirements may adversely affect the financial performance of skilled nursing facility operators.

Fraud and Abuse Laws

Healthcare providers participating in federal healthcare programs are subject to numerous federal and state fraud and abuse laws including the Federal Anti Kickback Statute, the physician self referral law commonly referred to as the Stark Law and the Federal False Claims Act. Violations of these laws may result in significant civil and criminal penalties, exclusion from federal healthcare programs and other sanctions.

Privacy and Data Security

Healthcare providers are subject to federal and state laws governing the privacy and security of patient information. The Health Insurance Portability and Accountability Act establishes national standards governing the use and disclosure of individually identifiable health information and requires healthcare providers to implement administrative technical and physical safeguards to protect electronic health information.

Pharmacy Regulation

The Company’s Pharmacy Services operations are subject to extensive federal, state and local laws and regulations governing the dispensing and distribution of pharmaceutical products and the operation of pharmacy businesses. Pharmacies must be licensed in the states in which they operate and must comply with state board of pharmacy regulations governing prescription drug dispensing, labeling and packaging, recordkeeping, drug utilization review, and inventory management. Pharmacies that dispense controlled substances must also register with the U.S. Drug Enforcement Administration and comply with federal Controlled Substances Act requirements relating to drug security, storage, recordkeeping, reporting and diversion prevention. Federal and state authorities may conduct periodic inspections, audits and investigations to ensure compliance with these requirements, and violations may result in sanctions including civil or criminal penalties, suspension or revocation of pharmacy licenses, and exclusion from participation in government reimbursement programs.

Pharmacy operations are also subject to numerous federal and state healthcare fraud and abuse laws, including the Federal Anti-Kickback Statute and the Federal False Claims Act, which apply to relationships between pharmacies, healthcare providers and government healthcare programs. In addition, pharmacies must comply with the Health Insurance Portability and Accountability Act and related regulations governing the privacy and security of protected health information. Compliance with these laws requires significant operational oversight, training and compliance monitoring and may increase operating costs.

Reimbursement for pharmacy services is derived from a combination of federal healthcare programs, state Medicaid programs, commercial insurance plans and pharmacy benefit managers. Reimbursement rates are often subject to contractual arrangements with third-party payors and pharmacy benefit managers and may be adjusted based on drug pricing benchmarks, formulary requirements or utilization management policies. Government and private payors have undertaken ongoing efforts to control healthcare costs, including initiatives designed to reduce pharmaceutical reimbursement levels and increase oversight of pharmacy billing practices. These efforts may reduce pharmacy reimbursement rates or increase administrative requirements for pharmacy providers.

Pharmacy operations also depend on the availability of pharmaceutical products from drug manufacturers and wholesalers. Pharmacies typically obtain medications through arrangements with large pharmaceutical wholesalers, and disruptions in pharmaceutical manufacturing, supply chain constraints or drug shortages may affect the availability and cost of medications. In addition, long-term care pharmacies frequently provide services to residents of assisted living facilities, skilled nursing facilities and other long-term care providers, and changes in the regulatory environment affecting these facilities may affect demand for pharmacy services.

Because pharmacy operations involve the handling and dispensing of prescription medications to vulnerable patient populations, pharmacies may also be subject to product liability claims, medication dispensing errors and regulatory enforcement actions. Compliance with the complex regulatory framework governing pharmacy operations may require significant administrative and compliance resources, and changes in applicable laws, reimbursement policies or regulatory enforcement priorities could materially affect the Company’s pharmacy operations and financial results.

Environmental Regulation

As an owner of healthcare real estate the Company is subject to federal, state and local environmental laws governing the handling and disposal of hazardous materials, medical waste and other environmental matters. These laws may impose liability for environmental contamination regardless of fault and may require substantial costs for investigation and remediation.

We believe the Company is in substantial compliance with applicable federal, state and local environmental regulations. To date, compliance with federal, state and local laws regulating the discharge of material into the environment or otherwise relating to the protection of the environment have not had a material effect upon our results of operations, financial condition or competitive position. Similarly, we did not make any material capital expenditures to comply with such environmental, health, and safety laws, ordinances and regulations in 2025 and 2024.

Human Capital Resources

As of December 31, 2025, we had 731 employees of which all were full-time or part-time employees. The Company is actively working to attract and retain permanent employees and offers benefits to care for the diverse needs of our employees. These include health benefits, paid vacations, and benefits to support employee mental health, including an employee assistance program. As we continue to face evolving environmental and health challenges, we continually review our offerings to improve the competitiveness of our total compensation programs, including our health benefit offerings.

Item 1A. Risk Factors

Investing in our securities involves risks. The following factors, among others, could materially adversely affect our business, financial condition, results of operations and cash flows. These risks should be considered together with the other information contained in this Annual Report.

Risks Related to Our Business

Our revenues depend on reimbursement from Medicare, Medicaid and other third-party payors; therefore, changes in reimbursement policies or payment methodologies could adversely affect our business.

A substantial portion of the revenues generated by our Healthcare Services segment, our Pharmacy Services segment and our tenants is derived from payments from government healthcare programs such as Medicare and Medicaid. These programs are subject to frequent statutory, regulatory and administrative changes, including rate reductions, changes in payment methodologies, increased utilization review, retroactive adjustments and limitations on covered services. The healthcare industry is also increasingly shifting toward value-based purchasing and other reimbursement models that link payments to quality metrics, patient outcomes and efficiency of care. If reimbursement rates decline, if new reimbursement methodologies are unfavorable, or if we, our operators or our pharmacy business fail to satisfy program requirements, our revenues, operating margins and financial condition could be materially adversely affected.

Changes in patient acuity, payor mix, bundled payments and consolidated billing arrangements could reduce our revenues and margins.

Our operating results are affected not only by reimbursement rates, but also by changes in patient acuity, length of stay, payor mix and the structure of reimbursement programs. A shift toward lower-margin residents, increased Medicare Advantage penetration, lower Medicaid reimbursement, shorter stays or increased use of bundled payment, consolidated billing or other cost-containment arrangements could reduce revenues and profitability. In addition, if reimbursement models do not adequately compensate us or our operators for the clinical needs of residents, pharmacy costs, therapy costs or other services furnished, our margins could be adversely affected.

Transition to direct operation of certain facilities may not be successful and exposes us to additional operating, regulatory and staffing risks.

We are shifting from primarily leasing facilities to operating certain facilities directly. Operating skilled nursing and related healthcare facilities requires capabilities that differ from our historical landlord model, including recruiting and retaining clinical staff amid labor shortages and elevated wage and agency costs; establishing and maintaining operating systems, billing and compliance processes and internal controls; obtaining and maintaining required state licenses and Medicare/Medicaid certifications; and, at some locations, managing third‑party managers. Newly operated facilities may require working capital and ramp‑up time and may not achieve expected volumes, payor mix or quality metrics. If we do not execute this transition effectively, we could face higher costs, operating losses, regulatory sanctions, impairment charges and liquidity pressure, and our business, financial condition and results of operations could be materially adversely affected.

For independent living, memory care and assisted living segments, revenue is also dependent on private pay sources such that events which adversely affect the ability of seniors to afford our resident offerings such as declines in the economy, housing market, consumer confidence, or the equity markets, increased inflation, and unemployment among resident family members, could cause our revenues and business to decline.

Costs to seniors associated with independent living, assisted living, and memory care communities are not generally reimbursable under government reimbursement programs such as Medicare and Medicaid. Economic decline or uncertainty, increased inflation, downturns in the housing market, higher levels of unemployment among resident family members, lower levels of consumer confidence, stock market volatility, and changes in demographics could adversely affect the ability of seniors to afford to live in our facilities. If we are unable to retain and attract seniors with sufficient income, assets, or other resources required to pay for independent living, assisted living, and memory care services and other service offerings, our occupancy, revenues, results of operations, and cash flow could decline.

Our tenants’ ability to pay rent depends on their financial performance, and tenant financial distress could materially adversely affect us.

A significant portion of our revenues is derived from lease payments from tenants who operate healthcare facilities on our properties. The ability of our tenants to satisfy their obligations depends on their operating performance, which is affected by factors including reimbursement levels, labor costs, regulatory compliance, occupancy and local market conditions. If one or more tenants were to experience financial distress, default on lease payments, seek bankruptcy protection or fail to renew leases, our rental income could decline. In addition, replacing a tenant may involve delays due to licensing, change-of-ownership approvals and other regulatory processes. Healthcare facilities are specialized assets, and identifying replacement operators may be difficult or time-consuming.

Competition and changing healthcare delivery models could reduce demand for our services.

The long-term care and healthcare services industries are highly competitive. We and our tenants compete with numerous providers of healthcare services, including skilled nursing facilities, home health providers, assisted living facilities, memory care providers, continuing care retirement communities and community-based care programs. Competition is based on factors such as quality of care, reputation, location, physician relationships, price and the range of services offered. In addition, healthcare delivery models continue to evolve, with increased emphasis on home-based care, outpatient treatment and alternatives to institutional long-term care, which may reduce demand for some of our services.

Labor shortages and staffing mandates could increase operating costs and adversely affect operations.

The healthcare industry is experiencing ongoing shortages of qualified nurses, caregivers, therapists, pharmacists and other healthcare professionals. Recruiting and retaining qualified personnel has become increasingly difficult and costly. Labor costs have increased due to wage inflation, competition for qualified staff, reliance on temporary staffing agencies and regulatory staffing requirements. Federal and state governments have implemented or proposed minimum staffing mandates for skilled nursing facilities. Complying with these requirements may significantly increase labor costs and could reduce profitability if reimbursement rates do not increase sufficiently to offset these expenses. Failure to maintain adequate staffing levels could also negatively affect quality ratings, regulatory compliance and facility operations.

State direct-spending requirements, supplemental Medicaid payment changes and other Medicaid funding restrictions could adversely affect our results.

Certain states have adopted, and other states may adopt, requirements that skilled nursing facilities spend specified portions of their revenue, including Medicaid-derived revenue, on direct patient care, staffing or other designated cost categories. These requirements may reduce operating flexibility, create compliance burdens and expose operators to penalties, recoupments, admission restrictions or other sanctions if they are not satisfied. In addition, some states have provided supplemental Medicaid payments or other support intended to offset labor inflation or workforce shortages. If such payments are reduced, delayed or eliminated, and base reimbursement rates do not increase sufficiently, our operators’ financial performance and our results could be adversely affected.

Increased survey enforcement, public quality ratings and staffing-related disclosure requirements could adversely affect our facilities and operators.

Federal and state agencies have increased scrutiny of skilled nursing facilities, including through enhanced survey enforcement, payroll-based staffing data review, infection-control oversight, public reporting of quality measures and staffing levels, and the CMS Five-Star Quality Rating System. Deficiency citations, lower public ratings, staffing-related findings or alleged failures to meet regulatory requirements may result in civil monetary penalties, denial of payment for new admissions, directed plans of correction, reputational harm, reduced referrals and lower occupancy. These developments could adversely affect the financial performance of our operated facilities and the ability of our tenants to satisfy their obligations to us.

Union activity, labor organizing efforts and other labor-related disputes could increase our costs and disrupt operations.

We and our operators compete for qualified nurses, therapists, administrators, pharmacists, pharmacy technicians and other personnel in a challenging labor market. Union activity, organizing campaigns, collective bargaining, strikes, work stoppages or other labor-related disputes could increase wages and benefits, reduce operational flexibility, disrupt staffing and adversely affect patient care and financial performance. Labor-related disputes may also lead to reputational harm, regulatory scrutiny or difficulty recruiting and retaining employees.

Public health crises and infectious disease outbreaks could disrupt operations and reduce occupancy.

Healthcare facilities are particularly vulnerable to public health crises such as epidemics, pandemics and severe seasonal illnesses. Such events may lead to reduced occupancy, increased operating costs, staffing shortages, employee burnout, litigation, regulatory enforcement and disruptions in referral patterns. Future public health crises could materially disrupt our operations and the operations of our tenants.

Economic downturns could negatively impact tenant performance and access to capital.

Periods of economic instability, inflation, rising interest rates or credit market disruption could adversely affect the healthcare industry and the real estate markets in which we operate. Economic downturns may reduce the financial stability of our tenants and limit their ability to pay rent. In addition, economic conditions may restrict our access to capital markets or increase borrowing costs, which could impair our ability to refinance debt or fund acquisitions.

Natural disasters and other catastrophic events could damage our properties and disrupt operations.

Our facilities may be affected by hurricanes, floods, fires, earthquakes, severe weather events, acts of terrorism and other catastrophic events. Such events may damage or destroy facilities, disrupt operations, require evacuation of residents, increase insurance costs and reduce occupancy. Insurance coverage may not fully cover losses or may not be available on acceptable terms.

Our geographic concentration exposes us to regional economic and regulatory risks.

Our properties are located in a limited number of states, with a significant concentration in the Southeast and certain markets in the Midwest. Regional economic conditions, demographic changes, reimbursement policies and regulatory developments affecting these areas could have a disproportionate impact on our operations.

Changes in reimbursement policies and purchasing programs could adversely affect our Pharmacy Services segment.

Our Pharmacy Services segment derives a substantial portion of its revenues from Medicare, Medicaid and other government healthcare programs. Changes in reimbursement methodologies, competitive bidding programs, average sales price methodologies, purchasing programs or other pricing benchmarks could reduce reimbursement levels. States and managed care organizations may also adopt restrictive formularies, reimbursement limitations or other cost-containment measures that reduce pharmacy reimbursement rates.

Our Pharmacy Services segment is subject to risks relating to long-term care pharmacy network participation, Part D requirements and third-party payor contracts.

Our institutional pharmacy business depends in part on participation in third-party payor networks and compliance with requirements applicable to long-term care pharmacies, including Medicare Part D and other government and commercial program requirements. If we are unable to maintain or renew contracts with pharmacy benefit managers, Part D plans, managed care organizations or other payors on acceptable terms, or if reimbursement is not adequate to cover the specialized services required of long-term care pharmacies, our pharmacy revenues and margins could be adversely affected. Changes in formulary design, network participation criteria, pricing benchmarks, utilization management requirements or other contract terms could also reduce reimbursement and profitability.

The Pharmacy Services business depends on key suppliers and customers.

Our Pharmacy Services segment relies heavily on certain suppliers for pharmaceutical products and on a limited number of important customer relationships. The loss of a key supplier, drug shortages, supply-chain disruptions or the loss of one or more significant customers could adversely affect pharmacy operations and financial performance.

The Pharmacy Services industry is highly competitive.

The pharmacy services market includes large national providers and integrated pharmacy platforms with substantially greater financial and operational resources than we possess. Increased competition, consolidation in managed care contracting, pressure from pharmacy benefit managers, changes in reimbursement and reduced growth in pharmaceutical demand could adversely affect our pharmacy operations.

Dispensing errors, failures in medication management or other pharmacy service issues could result in liability, reputational harm and loss of business.

Our pharmacy operations involve dispensing, packaging, delivering and managing of medications for elderly and medically complex patients, including residents of skilled nursing and assisted living facilities. Errors in dispensing, labeling, delivery, drug-interaction review, medication administration support or other pharmacy services could contribute to adverse drug events, hospitalizations, regulatory investigations, professional liability claims, loss of customers and reputational harm. Because long-term care residents often take multiple medications and have complex clinical needs, failures in pharmacy coordination or service quality could have a material adverse effect on our Pharmacy Services segment.

The healthcare industry is highly regulated, and regulatory changes or enforcement actions could adversely affect our tenants and operations.

Healthcare operators are subject to extensive federal, state and local regulations governing licensure, facility operations, reimbursement practices, patient care standards, fraud and abuse laws and financial relationships with providers. Failure to comply with these laws could result in fines, sanctions, loss of licensure, exclusion from government programs, facility closure, repayment obligations or other liabilities. Changes in healthcare laws, regulations or enforcement priorities could materially affect our business and the businesses of our operators.

Cybersecurity incidents or data breaches could disrupt operations and expose us to liability.

We rely on information technology systems and third-party service providers to manage business operations and sensitive information. Cybersecurity incidents, ransomware attacks, phishing events or other system disruptions could result in operational interruptions, unauthorized disclosure of confidential information, regulatory investigations, litigation and reputational harm. Healthcare organizations are frequent targets of cyberattacks, and our security measures may not prevent all incidents.

Environmental liabilities could arise from ownership of real estate.

As an owner of real property, we may be subject to environmental laws that impose liability for the presence or disposal of hazardous substances on our properties, regardless of fault. Environmental remediation costs or liabilities could exceed the value of the affected property, and tenant indemnities may not be enforceable or sufficient.

Risks Relating to Our Industry or Structure

Our substantial indebtedness could adversely affect our financial flexibility.

Our indebtedness could increase vulnerability to economic downturns, require significant cash flow to service debt, limit our ability to obtain additional financing and restrict operational flexibility due to financial covenants. Failure to comply with debt covenants could result in defaults and acceleration of outstanding debt.

We rely on external sources of capital and may be unable to obtain financing on favorable terms.

Our ability to grow our business and refinance existing debt depends on access to capital markets and other sources of financing. Market conditions, investor sentiment and our financial performance may affect our ability to obtain financing. If capital is unavailable or expensive, we may be unable to fund acquisitions, refinance maturing debt or pursue strategic opportunities.

Rising interest rates could increase borrowing costs.

Increases in interest rates could raise the cost of our existing variable-rate debt and future borrowings. Higher borrowing costs could reduce profitability, constrain capital deployment and limit acquisition opportunities.

Future transactions could result in dilution to existing shareholders.

We may pursue equity offerings, joint ventures, mergers or other strategic transactions in order to raise capital or pursue strategic opportunities. These transactions could result in significant dilution to existing shareholders.

We may fail to realize the anticipated benefits of the SunLink merger.

The anticipated strategic and financial benefits of the merger with SunLink may not be realized as expected or may take longer than anticipated. Integration challenges, unexpected liabilities or operational disruptions could reduce the expected benefits of the transaction.

Integration risks and loss of key employees could affect the combined company.

Successfully integrating operations, systems, personnel and business processes following the merger may be complex and costly. The loss of key employees or operational disruptions could negatively impact the combined company’s performance and delay realization of expected synergies.

Risks Relating to Public Company Compliance

The costs of being publicly owned may strain our resources and impact our business, financial condition, results of operations and prospects.

As a public company, we are subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls for financial reporting. We are required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, which requires annual management assessments of the effectiveness of our internal controls over financial reporting.

These requirements may place a strain on our systems and resources and have required us, and may in the future require us, to hire additional accounting and financial resources with appropriate public company experience and technical accounting knowledge. In addition, failure to maintain such internal controls could result in us being unable to provide timely and reliable financial information which could potentially subject us to sanctions or investigations by the SEC or other regulatory authorities or cause us to be late in the filing of required reports or financial results. Any of the foregoing events could have a materially adverse effect on our business, financial condition, results of operations and prospects.

Risks Related to Our Securities and Organizational Documents

The market price of our securities may be volatile.

The trading price of our securities may fluctuate due to changes in financial performance, general market conditions, industry trends, analyst recommendations and investor sentiment. Stock market volatility may cause significant price fluctuations independent of our operating performance.

Our securities trade on the OTCQB market, which provides limited liquidity.

Our common stock and preferred stock trade on the OTCQB market. Trading on the OTCQB generally results in reduced liquidity, wider bid-ask spreads, lower analyst coverage and fewer institutional investors than trading on a national securities exchange. Limited trading liquidity may adversely affect the market prices of our securities and our ability to raise capital.

The rights of holders of our preferred stock are senior to those of our common shareholders, and the rights among our series of preferred stock are not identical.

Our capital structure includes multiple series of preferred stock with differing rights, preferences and priorities. The rights of holders of our preferred stock may rank senior to the rights of holders of our common stock with respect to dividends, distributions and liquidation proceeds. In addition, the rights of one series of preferred stock may rank senior to, junior to or on parity with another series of preferred stock. As a result, holders of our common stock may not be entitled to receive dividends or liquidation proceeds unless and until the dividend and liquidation preferences of the applicable preferred stock have been satisfied. These preferences may reduce the value of our common stock and may adversely affect the rights of common shareholders in the event of a liquidation, sale of the Company or other corporate transaction.

We are a holding company and depend on dividends and other distributions from our subsidiaries to meet our obligations.

We are a holding company and conduct substantially all of our operations through our subsidiaries. Accordingly, our ability to meet our financial obligations, including debt service, operating expenses and any future dividends or other distributions to shareholders, depends on the receipt of dividends, distributions and other payments from our subsidiaries. The ability of our subsidiaries to make such payments may be restricted by applicable law, contractual obligations, debt covenants, regulatory requirements or the financial condition and operating performance of those subsidiaries. If our subsidiaries are unable to make distributions to us, our liquidity and financial flexibility could be materially adversely affected.

Ownership and transfer restrictions contained in our Charter may restrict acquisitions or transfers of our stock.

Our Charter contains ownership and transfer restrictions that may discourage, delay or prevent a person from acquiring or transferring shares of our stock. These restrictions may limit the ability of shareholders to transfer shares freely, may deter a change in control transaction and may reduce the liquidity or market value of our securities. These provisions may also prevent shareholders from receiving a premium for their shares that might otherwise be offered in connection with a proposed acquisition of the Company.

Provisions of Georgia law and our organizational documents may delay or prevent a change in control that shareholders may consider favorable.

Certain provisions of Georgia law, as well as provisions in our Charter and Bylaws, may have the effect of discouraging, delaying or preventing a change in control or changes in our management, even if some or all of our shareholders believe such a transaction or change would be in their best interests. These provisions may include restrictions on share ownership and transfer, advance notice requirements, provisions relating to the calling of shareholder meetings, and other governance provisions that could make it more difficult for a third party to acquire control of us or for shareholders to effect changes in our Board of Directors or management. These provisions could discourage takeover attempts, reduce the market price of our securities or prevent shareholders from realizing a premium over the market price of their shares.

Transactions we may pursue in the future, including transactions intended to strengthen our capital structure or improve market listing eligibility, may dilute existing shareholders.

We may in the future pursue equity issuances, convertible securities offerings, preferred stock issuances, exchanges, restructurings or other strategic or financing transactions in order to raise capital, repay indebtedness, support operations, pursue acquisitions or improve our capital markets position. Any such transaction could dilute the ownership interests or voting power of existing shareholders, reduce earnings per share or otherwise adversely affect the rights of existing holders of our common stock or preferred stock. If we issue securities with rights, preferences or privileges senior to those of our existing securities, the value of our outstanding securities could be adversely affected.

Shareholders may experience dilution or reduced voting influence as a result of past or future merger and financing transactions.

Past and future merger, acquisition, financing or restructuring transactions may reduce the ownership percentage, economic interest or voting influence of existing shareholders. Shareholders may not realize benefits from such transactions that are commensurate with any dilution they experience. In addition, the market may react negatively to such transactions, which could adversely affect the price of our securities.

General Risk Factors

If we lose key management personnel, we may not be able to successfully manage our business or achieve our objectives, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

We are dependent on our management team, and our future success depends largely upon the management experience, skill, and contacts of our management and the loss of any of our key management team could harm our business. If we lose the services of any or all of our management team, we may not be able to replace them with similarly qualified personnel, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Our directors and officers substantially control all major decisions.

Our directors and officers beneficially own a significant number of shares of our outstanding common stock. Therefore, our directors and officers will be able to influence major corporate actions required to be voted on by shareholders, such as the election of directors, the amendment of our charter documents and the approval of significant corporate transactions such as mergers, reorganizations, sales of substantially all of our assets and liquidation. Furthermore, our directors will be able to make decisions affecting our capital structure, including decisions to issue additional capital stock, implement stock repurchase programs and incur indebtedness. This control may have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management, or limiting the ability of our other shareholders to approve transactions that they may deem to be in their best interests.

Item 1B. Unresolved Staff Comments

Disclosure pursuant to Item 1B of Form 10-K is not required to be provided by smaller reporting companies.

Item 2. Properties

Owned and Leased Facilities

The following table provides summary information regarding our property portfolio as of December 31, 2025:

1. Indicates the operator with which the tenant of the facility is affiliated.

2. The Company leases one SNF and subleases it to Aspire Regional Partners.

3. Eaglewood Village and Eaglewood Care Center are co-located.

4. RHP Operations generally utilizes outside third party managers to provide day-to-day management services of the facilities.

Our leases and subleases are generally on an individual facility basis with tenants that are separate legal entities affiliated with the above operators. See “Portfolio of Healthcare Investments” in Part I, Item 1, “Business”, in this Annual Report.

All facilities are SNFs except for the Eaglewood ALF facility and the Meadowood facility, which are ALF’s. Bed/units numbers refer to the number of licensed beds.

For a detailed description of the Company’s operating leases, please see Note 8 - Leases to our audited consolidated financial statements included in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report.

For a detailed description of the Company’s related mortgages payable for owned facilities, see Note 10 - Notes Payable and Other Debt to our audited consolidated financial statements included in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report.

Portfolio Occupancy Rates

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

Lease Expiration

The following table provides summary information regarding our lease expirations for the years shown:

Corporate Office

Our corporate office is located in Atlanta, Georgia. Effective July 1, 2023, we signed a sublease agreement for approximately 2,000 square feet of office space in Atlanta, Georgia. The sublease term expired on July 31, 2025. On July 30, 2025, the Company entered into a two year lease with the landlord which the lease commenced August 1, 2025 and will expire on July 31, 2027.

Item 3. Legal Proceedings

The Company is party to various legal actions and administrative proceedings that have arisen in the ordinary course of business, including matters relating to prior direct facility operations, current operated facilities, employment matters, staffing-related matters, commercial disputes and other business matters. Litigation and administrative proceedings are inherently uncertain, and there can be no assurance that the resolution of any such matters will not have a material adverse effect on the Company’s business, financial condition or results of operations.

In addition, because the Company owns healthcare properties and in some cases operates facilities directly, and because its tenants and operators conduct business in a highly regulated industry, the Company may from time to time be affected by governmental inquiries, audits, surveys, investigations and other proceedings involving patient care, reimbursement, licensure, labor matters and regulatory compliance.

Certain legal matters, including professional and general liability claims and other contingencies, are described in Note 15 – Commitments and Contingencies to the audited consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report, and that disclosure is incorporated herein by reference. See also Part I, Item 1A, “Risk Factors,” for a discussion of risks relating to litigation, regulatory matters and other contingencies.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market for Registrant’s Common Equity

The Company's common stock and Series A Preferred Stock was listed for trading on the NYSE American under the symbol “RHE” and "RHE-PA," respectively, up until June 11, 2025 when it was delisted as a result of not meeting certain listing requirements. Currently, the Company's common stock and Series A Preferred Stock are listed on the OTC Market under the symbol "RHEP" and "RHEPA," respectively. Based on information supplied from our transfer agent, there were approximately 2,321 shareholders of record of the common stock as of March 01, 2026.

We are a holding company with no significant operations. We rely primarily on dividends and other distributions from our subsidiaries to, among other things, pay dividends on the common stock, and the Series A Preferred Stock, if and to the extent declared by the Board. The ability of our subsidiaries to pay dividends and make other distributions to us depends on their earnings and may be restricted by the terms of certain agreements governing their indebtedness. If our subsidiaries are in default under such agreements, they may not pay dividends or make other distributions to us.

In addition, we may only pay dividends on the common stock and the Series A Preferred Stock if we have funds legally available to pay dividends and such payment is not restricted or prohibited by law, or by the terms of any shares with higher priority with respect to dividends or any documents governing our indebtedness. We are restricted by Georgia law from paying dividends on the common stock and the Series A Preferred Stock if we are not able to pay our debts as they become due in the normal course of business or if our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy preferential rights of shareholders whose preferential rights are superior to those receiving the dividend. In addition, future debt, contractual covenants or arrangements we or our subsidiaries enter into may restrict or prevent future dividend payments.

On January 29, 2025, the board of directors of the Company declared a dividend to the holders of its 12.5% Series B Cumulative Redeemable Preferred Shares (the “Series B Preferred Stock”), on a pro rata basis in proportion to the number of shares of Series B Preferred Stock held by such holders of 250,000 shares of the Company’s common stock, rounded down to the nearest whole share of Common Stock. The dividend was paid on February 19, 2025 to holders of record of the Series B Preferred Stock as of the close of business on February 10, 2025 and 249,990 shares of the Company's common stock were issued. The Company is required to pay the dividend of Common Stock to such holders of Series B Preferred Stock pursuant to the terms of Regional’s Amended and Restated Articles of Incorporation, which governs the terms of the Series B Preferred Stock.

Issuer Purchases of Equity Securities

In 2025, the Company purchased 511,099 shares of its 12.5% Series B Cumulative Preferred shares for a total cost of approximately $3.6 million. The shares were funded from cash on hand and were cancelled and returned to the status of authorized but unissued. There were no open-market repurchases of the Company's other securities.

For further information, see Note 12 - Common and Preferred Stock to our audited consolidated financial statements included in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report.

Item 6. [Reserved]

Not applicable.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The purpose of this Management’s Discussion and Analysis of Financial Condition and Results of Operations is to provide investors with management’s perspective on the Company’s financial condition, results of operations, liquidity and capital resources, including known trends, demands and uncertainties that management believes are reasonably likely to affect future performance.

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 owner-operator model that combines healthcare real estate ownership with the direct operation of healthcare facilities and related healthcare services. As of December 31, 2025, the Company had investments of approximately $59.9 million in healthcare real estate and operated or leased a portfolio consisting primarily of skilled nursing facilities and senior housing communities located in five states. In addition, following the SunLink merger completed on August 14, 2025, the Company operates a pharmacy business located in Louisiana.

The Company operates through three reportable segments: Healthcare Services, Pharmacy Services and Real Estate. The Healthcare Services segment includes the direct operation of 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, Alzheimer’s and dementia care, and senior living services. The Pharmacy Services segment includes retail pharmacy products and services, institutional pharmacy services and durable medical equipment. The Real Estate segment consists of investments in skilled nursing and senior housing properties that are leased or subleased to third-party operators under triple-net lease arrangements. These segments reflect the Company’s evolution from a healthcare landlord into a more diversified healthcare company with both real estate and operating capabilities.

The comparability of the Company’s 2025 and 2024 results is significantly affected by our changes in business mix during 2025. First, the SunLink merger added the Pharmacy Services segment beginning on August 14, 2025. Second, several facilities that were leased, subleased or managed in 2024 transitioned to operated status during 2025 and are now included in the Healthcare Services segment. As a result, year-over-year comparisons reflect not only changes in operating performance, but also a meaningful change in segment composition, including increased patient care revenues and patient care expenses in Healthcare Services, the addition of pharmacy revenues and cost of goods sold in Pharmacy Services, and lower rental revenues in Real Estate as certain properties are no longer operated under lease structures.

The Company funds its business and its three reportable segments primarily through operating cash flow, collections of patient, pharmacy and rent receivables, mortgage and other debt financing, asset sales and, when available, proceeds from the sale of securities.

Executive Summary

During 2025, the Company’s operating results were materially influenced by the integration of the SunLink merger, labor cost inflation, the addition of the Pharmacy Services segment and the transition of certain facilities from leased or managed status to operated status. These developments increased consolidated revenues, but also increased operating expenses and working capital requirements.

Management evaluates performance using both consolidated results and the performance of the Company’s three reportable segments. In 2025, Healthcare Services became a larger contributor to consolidated revenues as Georgetown, Southland and Sumter properties transitioned from leased or managed assets into operated facilities. The Real Estate segment continued to contribute recurring rental revenues, although those revenues declined year over year due to the transition of Mountain Trace and other facilities away from lease structures. Beginning in

mid-August 2025, the Pharmacy Services segment contributed script volume, pharmacy revenues and related cost of goods sold following the SunLink merger.

Management’s primary operational areas of focus are occupancy and census growth within Healthcare Services, script count and reimbursement collections within Pharmacy Services, and rent collections, tenant credit quality and portfolio optimization within Real Estate. The Company also continues to focus on labor management, cash collections, refinancing activity and the integration of the businesses acquired in the SunLink merger.

Key Segment Operating Metrics

Management evaluates the performance of the Company’s business using selected operating and financial metrics that management believes are most relevant to each of the Company’s three reportable segments.

Healthcare Services

The most important operating metrics for the Healthcare Services segment are occupancy/census, payor mix, labor costs, and accounts receivable collections. Management believes these measures are the primary drivers of patient care revenue, operating margins and cash flow for the facilities the Company operates directly.

Occupancy and census are key indicators of demand and facility utilization. Management also monitors payor mix, including the relative percentage of Medicare, Medicaid, managed care and private-pay residents, because reimbursement rates and margins vary significantly by payor source. In addition, labor costs, including wage rates, agency staffing usage and employee benefit costs, are critical measures of operating performance given the labor-intensive nature of skilled nursing and senior housing operations. Management also closely monitors patient accounts receivable and collection trends, as increases in patient receivables can materially affect the segment’s working capital and liquidity.

Pharmacy Services

The most important operating metrics for the Pharmacy Services segment are script count, reimbursement collections, gross margin, and customer retention. Management believes these measures are the best indicators of the scale, profitability and cash-generation profile of the pharmacy business.

Script count is a key measure of pharmacy volume and operating activity. Management also monitors reimbursement collections and the timing of payment from government and commercial payors, because reimbursement levels and collection timing directly affect revenue realization and working capital. Gross margin is an important measure of the relationship between pharmacy revenues and the cost of pharmaceutical products sold or medicila equipment rented. Customer retention is also a significant operating measure because the stability of institutional and retail customer relationships affects recurring revenue and the long-term growth of the segment.

Real Estate

The most important operating metrics for the Real Estate segment are rent collections, tenant credit quality, lease performance, and portfolio optimization opportunities. Management believes these measures are the most relevant indicators of the segment’s recurring cash flow and asset value. Rent collections are a primary measure of current segment performance because rental income remains the principal source of revenue within the Real Estate segment. Management also monitors tenant credit quality and the financial performance of operators, as tenant distress or weak facility performance can affect rent collections, lease renewals and the recoverability of receivables. In addition, management evaluates lease restructurings, lease terminations and transition opportunities to determine whether a property is best held as a leased asset, transferred to another operator, or operated directly within the Healthcare Services segment. These evaluations are an important part of the Company’s broader portfolio optimization and owner-operator strategy.

Industry Trends

The Company’s operations and those of its tenants continue to be affected by economic and market conditions,

including labor shortages, inflation, supply chain disruptions, interest rate levels and reimbursement pressures. These factors have increased operating costs, particularly labor costs, and in certain cases have affected occupancy, cash collections and the availability of capital.

The Company also continues to operate in an environment in which healthcare labor availability, reimbursement trends and the performance of individual operators can influence whether an asset is best held as a leased property in the Real Estate segment or operated directly through the Healthcare Services segment. Management’s strategic response has included transitioning certain defaulted or underperforming leased facilities back to operated status where the Company believes direct oversight may improve operating performance and value creation. This strategy is consistent with the Company’s broader transition toward a more integrated owner-operator model.

Recent Activities

Effective August 14, 2025, the Company completed its merger with SunLink Health Systems, Inc., with the Company continuing as the surviving corporation. Management believes the merger expanded the Company’s operating platform, adding pharmacy operations and creating opportunities for operational and corporate synergies.

On November 10, 2025, the Company sold the Coosa Valley facility for cash consideration of $10.6 million and recognized a gain on sale of approximately $3.8 million. In addition, during 2025, the Company terminated or transitioned several leases in an effort to maximize the value of owned properties, including Georgetown, Sumter, Southland and Mountain Trace, and in certain cases moved those facilities into the Healthcare Services segment.

Segment Reporting

Management believes the most meaningful way to understand 2025 results is by reference to the Company’s three reportable segments together with the consolidated statement of operations. Healthcare Services results reflect the direct operation of facilities, including the impact of taking back operations at certain properties during 2025. Pharmacy Services results reflect the partial-year contribution from the pharmacy business acquired in the SunLink merger. Real Estate results reflect rental income, credit loss expense and lease-related activity associated with facilities that remained leased or subleased to third-party operators.

At the consolidated level, patient care revenues, pharmacy revenues and patient care expense increased significantly in 2025 due primarily to the expanded Healthcare Services segment and the addition of Pharmacy Services, while rental revenues declined as certain facilities were transitioned out of the Real Estate segment and into operated status. Accordingly, line-item changes in the consolidated statement of operations should be evaluated in light of these changes in segment composition.

Years Ended December 31, 2025 and 2024

The following table sets forth, for the periods indicated, statement of operations items and the amount and percentage 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 audited consolidated financial statements and the notes thereto, in Part II, Item 8., “Financial Statements and Supplementary Data” in this Annual Report.