Company Website: http://www.sunlinkhealth.com
ATLANTA -- (Business Wire)

SunLink Health Systems, Inc. today announced that it will amend its annual report on Form 10-K for the fiscal year ended June 30, 2011 and its quarterly reports on Form 10-Q for the fiscal quarters ended March 31, 2011, September 30, 2011 and December 31, 2011 and that the financial statements included in these reports should no longer be relied upon in light of a requirement that Medicare and Medicaid incentive payments for the implementation of electronic health records (“EHR”) technology be accounted for using a gain contingency accounting model, not a grant accounting model previously used by SunLink for payments for the indicated fiscal periods ending prior to December 31, 2011. The restatement of SunLink’s financial statements for the periods stated above is required.

The restatement of financial statements does not affect the amount or the timing of past or future Medicare and Medicaid incentive payments. The change in accounting model for EHR incentive payments results in the incentive payments which were received in cash from Medicare attestation of successful EHR implementation in May 2011 being recognized in the Statement of Earnings and Loss in the quarter ended June 30, 2012. In May 2011, the Company received approximately $8,521,000 in Medicare incentive payments.

The Company and its Senior Lender have modified the financial covenants in the Company’s Credit Agreement as a result of the restatement of the financial statements such that the Company is currently in compliance with the terms of the Credit Agreement.

For a detailed discussion of the facts and circumstances surrounding the change in EHR accounting and the restatements, investors should refer to the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on May 8, 2012, which includes a summary of the expected effect of the restatements in the indicated periods.

SunLink Health Systems, Inc. currently operates five community hospitals and related businesses in the Southeast and Midwest, excluding Memorial Hospital of Adel that the company has contracted to sell, and also operates a specialty pharmacy company in Louisiana. Each SunLink facility is the only hospital in its community. SunLink’s operating strategy is to link patients’ needs with dedicated physicians and health professionals to deliver quality, efficient medical care in each community it serves. For additional information on SunLink Health Systems, Inc, please visit the company’s website at www.sunlinkhealth.com.

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, statements regarding the company’s business strategy. These forward-looking statements are subject to certain risks, uncertainties and other factors, which could cause actual results, performance and achievements to differ materially from those anticipated. Certain of those risks, uncertainties and other factors are disclosed in more detail in the company’s Annual Report on Form 10-K for the year ended June 30, 2011 and other filings with the Securities and Exchange Commission which can be located at www.sec.gov.

Contacts:

SunLink Health Systems, Inc.
Robert M. Thornton, Jr., 770-933-7004
Chief Executive Officer

Source: SunLink Health Systems, Inc.