SSY SunLink Health Systems, Inc.

Management Discussion

• The Healthcare Services segment in the current year is composed of one hospital, one nursing home, a subsidiary which provides information technology (“IT”) services to outside customers and SunLink subsidiaries, a leased medical office building and unimproved land. Healthcare Services net revenues increased $156, or 4%, for the three months ended March 31, 2019 compared to the prior year period. The increase in net revenues for the third fiscal quarter this year resulted from increased hospital and nursing home net revenues that were only partially offset by decreased IT services net revenues. Hospital patient days increased 5 % while nursing home resident days increased 8% in this this year’s third fiscal quarter compared to the prior year. There were no prior years’ Medicare and Medicaid cost report settlements for the three months ended March 31, 2019 compared to negative $73 prior years’ Medicare and Medicaid cost report settlements for the three months ended March 31, 2018.