Becker's Hospital Review

12 CFO / FINANCE Rennova reports late payroll, cash deficiencies By Ayla Ellison R ennova Health saw revenue drop last year and is struggling to stay afloat, according to an April 15 filing with the Securi- ties and Exchange Commission. e West Palm Beach, Fla.-based company reported revenue of $7.2 million in 2020, down from $16 million a year earlier. e company attributed the decline to several factors, including the COVID-19 pandemic. "As a result of the COVID-19 pandemic, we believe demand for our services was reduced," Rennova said. "Also reducing revenue were staffing issues and supply shortages caused by cash constraints during the 2020 period, which required us to divert patients to third party facilities." e company said its Tennessee hospitals have operated at a loss with a cash deficiency. "Cash deficiencies mean that payroll has been late, making reten- tion of key employees difficult," Rennova said. "Unless this situation is corrected we may lose employees to the point where it becomes difficult to operate, or we may fail to attract employees to key posi- tions necessary for the business to succeed." As of March 19, Rennova was three pay periods behind on payroll at its hospital in Oneida, Tenn., according to e Independent Herald. Rennova said lower revenue at Jamestown (Tenn.) Regional Med- ical Center also contributed to the company's drop in revenue last year. e hospital suspended operations in June 2019, and Rennova said it plans to reopen the facility once it secures the capital to do so. Revenue from Rennova's Jellico (Tenn.) Community Hospital also declined last year, and the company closed the hospital this March. Rennova closed the 54-bed hospital aer the city of Jellico issued a 30-day termination notice for the lease of the building, according to the SEC filing. e company said the losses have led to situations where it needed more capital, oen at short notice, for it to remain in business. "e company relies on its CEO to secure funding to meet cash shortfalls," Rennova said. "If capital is not secured, it will be difficult for the company to remain in operation." Rennova is also carrying a large debt load. As of Dec. 31, the com- pany had total debt outstanding of approximately $19.6 million, and, as a result of non-payment of past-due amounts, the company recorded penalties and penalty interest of $14.8 million, according to the SEC filing. "Our indebtedness could, among other things, make it more diffi- cult for us to satisfy our debt and other obligations, require us to use a large portion of our cash flow from operations to repay and service our debt or otherwise create liquidity problems, limit our flexibility to adjust to market conditions and place us at a competi- tive disadvantage," Rennova said. n Chicago's Mercy Hospital finalizes deal to stay open By Alia Paavola M ercy Hospital & Medical Center in Chicago and nonprofit Insight Chicago have finalized a deal that will keep the 170-year-old safety-net hospi- tal open, the organization said April 3. Under the final asset sale agreement, Insight Chicago will buy Mercy Hospital for $1. In exchange, Insight agreed to continue operating Mercy Hospital as a full-service com- munity acute care facility and meet charity care policies currently in place at the hospital. An Illinois review board approved the sale March 22. The sale was slated to close May 31. With the agreement finalized, Mercy Hospital will seek permission from the bankruptcy court to dismiss the Chapter 11 proceedings and transition the facility to In- sight Chicago. Mercy filed for bankruptcy protection Feb. 10, citing mounting financial losses and losses of staff that chal- lenged its ability to provide safe patient care. The hos- pital's owner, Livonia, Mich.-based Trinity Health, said it would wind down acute care services in May as part of the bankruptcy filing. n UPMC International says its China expansion is on track By Alia Paavola P ittsburgh-based UPMC International's expansion plans in China are moving forward, the Pittsburgh Business Journal reported April 12. In October 2019, months before the pandemic, UPMC announced plans to build a network of hospitals in part- nership with Chinese conglomerate Wanda Group. The two organizations broke ground on the first of the five planned hospitals in late October 2019. Despite the pandemic, the first hospital in Chengdu, Chi- na, is still on track to open in June 2022, according to the report. The Chengdu Wanda-UPMC International Hospi- tal is expected to cost about $870 million. The scope of the project in China has not changed, ac- cording to the report. The Wanda Group and UPMC still plan to build five facilities. Chuck Bogosta, president of UPMC International, told the Pittsburgh Business Journal the second hospital will be delayed about a year. n

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