SELECTIS HEALTH, INC. Annual Report - How They Did This Year

I’ve put together this guide to help you understand how Selectis Health performed this year. My goal is to explain their financial filings in plain English so you can decide if this company fits your investment goals.

1. What does this company do?

Selectis Health owns and runs 14 senior housing and nursing facilities in Georgia, Alabama, and Tennessee. They act as both the landlord and the manager. By handling their own physical, occupational, and speech therapy, they keep the full revenue—usually $150 to $350 per patient each day—instead of paying a third-party operator to manage the space.

2. Recent performance and strategy

The company is currently cleaning up its business. In early 2026, they sold two Georgia facilities for $13.2 million to raise cash and pay down debt. Their portfolio includes:

• Skilled Nursing: 8 facilities providing 24/7 medical care (70% of revenue).
• Assisted Living: 4 facilities providing daily help (20% of revenue).
• Independent Living: 2 facilities for self-sufficient seniors (10% of revenue).

They are centralizing human resources and purchasing across their region to save money. By consolidating, they aim to boost their profit margins, which currently sit at 12–15% for their core nursing business.

3. Major wins and challenges

• Debt Cleanup: In January 2026, the company paid off $18.5 million in high-interest debt and a $5.2 million bank loan. This saves them about $2.6 million in interest payments every year, which directly boosts their profit and cash flow.
• The "Owner-Operator" Risk: Managing their own facilities increases fixed costs. Labor accounts for 60–65% of their expenses and is sensitive to wage hikes and staffing shortages. If occupancy drops below 90%, these high fixed costs will quickly shrink their profits.
• Regulatory Tightrope: Since 85% of their revenue comes from Medicare and Medicaid, they are vulnerable to government payment changes. A 1% cut in government rates can cause a 3–5% drop in their total profit.

4. Financial health: Cash and debt

The company is running a lean balance sheet. As of late 2025, they had $425,000 in available cash. They cut long-term debt from $38 million in 2024 to about $19.5 million today. They generated $4.2 million in cash this year, which they are using to pay down debt and maintain facilities rather than buying new ones.

5. Key risks for your investment

• Heavy Competition: Large real estate investment trusts can borrow money much more cheaply than Selectis. This allows them to outbid Selectis for the best properties.
• Government Dependency: Changes to federal or state budgets could reduce the number of patients covered by Medicaid, making it harder for the company to cover its fixed costs.
• Legal Complexity: The company faces risks from medical lawsuits. They have set aside $1.2 million for legal issues. A major court loss could exceed this amount, potentially forcing the company to sell more assets or issue more shares, which would reduce your ownership percentage.

6. Future outlook

Selectis is selling underperforming assets to strengthen its finances. While they have fewer beds than last year, their ability to cover debt payments has improved significantly. Management aims to reach 92% occupancy over the next 18 months and may buy a few smaller facilities to grow within their existing regions.

Investor Takeaway: Selectis Health is currently in a "turnaround" phase. They are prioritizing debt reduction and operational efficiency over rapid expansion. If you are looking for a company that is shrinking its footprint to become more profitable and stable, this is a key trend to watch. However, keep a close eye on their occupancy rates—if they can't keep their beds full, their high fixed costs could quickly turn their recent financial progress into a struggle.