SUNLINK HEALTH SYSTEMS, INC.

900 Circle 75 Parkway, Suite 690

Atlanta, Georgia 30339

September 29, 2020August     , 2023

Dear Shareholder:

You are cordially invited to attend the AnnualSpecial Meeting of Shareholders, which will be held at 10:00 a.m., local time, on     Wednesday, November 11, 2020,day, September     , 2023, at the Hyatt House Hotel, 3595 Cumberland Blvd. SE,, Atlanta, GeorgiaGA 30339.

The accompanying NoticeTHE SPECIAL MEETING WILL BE HELD FOR THE FOLLOWING PURPOSES:

1. To consider a proposal to reincorporate the Company in Georgia (the “Reincorporation Proposal”), which reincorporation will have the effect of, among other things, eliminating the two-thirds supermajority shareholder voting provisions and replacing such provisions with a simple majority vote requirement and in connection therewith will have the effect of increasing the number of authorized shares of capital stock; and

2. To transact such other business as may properly come before the meeting or any adjournment or postponement of the Annual Meeting andmeeting.

These business items are described more fully in the Proxy Statement contain detailed information concerning the matters to be considered and acted uponaccompanying this Notice. Only shareholders who owned our Common Shares or Series C Fractional Interests of our Series C Preferred Stock at the meeting. The Company’s 2020 Annual Report to Shareholders is also enclosed.close of business on August         , 2023 can vote at the Special Meeting or any adjournments that may take place.

We hope you will be able to attend the meeting. The Company will arrange the meeting room to be compliant with local and state COVID-19 safety guidelines and may have to limit attendance. The Company will provide disposable 3-ply facemasks for all attendees.

Special Meeting. Shareholders of record at the close of business on September 24, 2020August        , 2023, are entitled to vote at the annual meeting.Special Meeting. Whether or not you plan to attend the meeting, we encourage you to read the Proxy Statement and vote as soon as possible. You may vote:

Whether or not you plan to attend the meeting, please vote via the internet, or telephone or execute and return the enclosed proxy card at your earliest convenience to ensure representation at the meeting. If you are providing a proxy and you later find you can attend the meeting, you may, if you wish, withdraw your proxy and vote in person.

We appreciate your support of SunLink.

Sincerely,

ROBERT M. THORNTON, JR.

Chairman and Chief Executive Officer

Whether or not you expect to be present, please vote via the internet or telephone or mark, sign, date, and return the enclosed proxy promptly in the envelope provided. Giving the proxy will not affect your right to vote in person if you attend the meeting.

By order of the Board of Directors of

SunLink Health Systems, Inc.

and Annual Report to Shareholders are is available over the internet at www.proxyvote.com, a website established specifically for access to such materials. Such materials are also available on the Company’s website at www.sunlinkhealth.com.

How to Vote

Your Vote Is Important. We encourage you to vote promptly. Internet and telephone voting is available through 11:59 p.m. local time on Tuesday,November 10, 2020September     , 2023, for all shares held of record. Depending on whether you are a record holder of your shares, or whether you hold your shares in “street name,” you may vote by any of the means described below.

Voting Procedures for Holders of Record

If you are a holder of record, you may vote your shares by any of the following methods:

By Internet: If you are a holder of record you can vote your sharesCommon Shares (and thus automatically the corresponding Series C Fractional Interests) by using the internet. Your proxy card indicates the website you need to access for internet voting. Holders of record may vote on the internet 24 hours a day. Our internet voting system has easy-to-follow instructions and allows record holders to confirm that the system has properly recorded their votes. If you vote by internet, you do not need to return your proxy card.

By Telephone: If you are a holder of record located in the U.S., you can also vote your shares by calling the toll-free telephone number provided on your proxy card. Holders of record may vote by telephone 24 hours a day. As with internet voting, you will be able to confirm that the system has properly recorded your votes. If you vote by telephone, you do not need to return your proxy card.

By Mail: If you are a holder of record, you can vote by marking, dating, and signing your proxy card and returning it by mail in the enclosed postage-paid envelope.

At the AnnualSpecial Meeting: You may vote in person at the AnnualSpecial Meeting. If you vote your shares now, it will not limit your right to change your vote at the AnnualSpecial Meeting if you attend in person.

Voting Procedures for Beneficial Holders

If you hold your shares in “street name,” you may vote your shares by any of the following methods:

By Internet/Telephone: The availability of internet and telephone voting for beneficial owners will depend on the voting processes of your broker, bank or other holder of record. Therefore, we recommend that you follow the voting instructions in the materials you receive from your broker, bank or other holder of record.

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American exchange”exchange”), prohibit broker discretionary voting on a variety of matters, including, but not limited to, the election of directors“non-routine” matter for shares held in client accounts when the broker has not timely received voting instructions from the client as well as on matters related to executive compensation.

Rule 451 and Rule 452(19) ofclient. The Reincorporation Proposal listed in the NYSE provides that if you fail to instruct the record owner how to vote by the tenth day beforenotice for the meeting is considered a “non-routine” matter. Broker non-votes do not exist when there is no discretionary matter under Rule 452 on the record owner is not permitted toproxy card. Therefore, your custodian may only vote your shares in its discretionbased on your behalf for the election of directors even in uncontested elections or on matters relatedinstructions. If you do not submit any voting instructions to executive compensation, but is permitted to vote your shares in its discretion on your behalf on specified routine items.

NYSE American exchange rules also determine whether other proposals presented at the shareholder meetings are routine or not routine. If your holdings of our common shares are held in street name, under the rules of the NYSE your broker or other nominee, may vote your shares on certain routine matters, if you doCommon Shares will not provide such record holderbe counted in determining whether a quorum exists or in connection with voting instructions. The ratificationthe Reincorporation Proposal at the Special Meeting and your Series C Fractional Interests will be automatically redeemed concurrent with the opening of the selection of our independent registered public accountants is considered a routine matter upon which brokerage firmsmeeting and other nominees may vote on behalfbefore the opening of the beneficial owners if nopolls for voting instructions are provided.

While banks and brokers have historically cast their votes on routine items in support of management’s recommendations in the absence of instructions from their clients, some firms are now casting uninstructed votes in the same proportion as their clients’ instructed votes, giving, in effect, investors who provide votingReincorporation Proposal. Accordingly, we urge you to promptly give instructions to brokers an opportunityyour custodian to disproportionately influencevote “FOR” approval of the outcomeReincorporation Proposal. Series C Preferred Stock not previously redeemed will be redeemed immediately after shareholder approval of proxy voting.the Reincorporation.

If you want to ensure that your shares are voted in accordance with your wishes on Proposals 1, 2, 3 and 4,the Reincorporation Proposal, you should complete and return your voting instruction form before November 2, 2020.September     , 2023.

Revocation of Proxies: All sharesCommon Shares (and corresponding Series C Fractional Interests) that have been properly voted and whose votes have not been revoked will be voted at the meeting. If you sign and return your proxy card without any voting instructions, your sharesCommon Shares and Fractional Interests will be voted as the boardBoard recommends.

Holders of Record

You can revoke your proxy at any time before your shares are voted if you: (1) submit a written revocation to our Secretary; (2) submit a later-dated proxy; (3) provide subsequent internet or telephone voting instructions within the time permitted for such voting methods; or (4) vote in person at the meeting.

Beneficial Holders

If you are a beneficial holder you can revoke your proxy or voting instructions at any time before your shares are voted if you (1) cause the record holder to submit a written revocation to our Secretary; (2) cause the record holder to submit a later dated proxy if you timely provide updated voting instructions to such holder by mail or if provided by the record holder by internet or telephone voting; or (3) vote your shares in person at the annual meeting through a later-dated proxy, executed in your favor, from the holder of record.

Quorum and Required Vote

Quorum: We will have a quorum and will be able to conduct the business of the annual meetingSpecial Meeting if the holders of a majority of the sharesCommon Shares (and thus a majority of the Series C Fractional Interests), that are entitled to vote are present at the meeting eitherby proxy or in person or by proxy.person.

Votes Required: To elect directors a plurality

The Reincorporation Proposal requires the favorable vote under the Corporation’s Certificate of theIncorporation and Code of Regulations and of two-thirds of all votes castentitled to be cast. Each Common Share is required. To ratify the appointment of Cherry Bekaert LLP as the Company’s Independent Registered Public Accounting Firm for Fiscal 2021 a majority of votes cast is required. The “say-on-pay” proposal will be approved if the number of votes cast in

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A complete copy of the charters of the board committees, the resolutions governing the process for identification and nomination of candidates for the boardIncorporation and the Code of Conduct for employees, as in effect from time-to-time, may be found on the Company’s website at www.sunlinkhealth.com. Copies of these materials are also available to shareholders without charge upon written request to the Secretary of the Company.

Summary of the Corporate Governance Principles

Board and Leadership Structure

The Company’s Code of RegulationsGeorgia Bylaws will provide for a minimum of six (6) and a maximum of eight (8) directors, as determined by the board from time-to-time. The Company currently consists of six (6) directors.

Our Company is led by Mr. Robert M. Thornton, Jr. who has served as chief executive officer and chairman of the board since 1998. We combine this traditional leadership structure with a board structure in which our non-management directors meet regularly outside of the presence of Mr. Thornton. We believe that this structure currently works best for the Company by providing us with the benefits of a single person setting the tone and having primary responsibility for managing our operations and provides clear leadership. At the same time, by having a board which is composed mainly of independent directors, including former CEOs, individuals with healthcare industry operating experience, and diverse other talents, we believe that we have created a board that is collegial, well versed in board processes and the duties of the committees on which they sit, and well engaged in their responsibilities. The board believes its members have no reticence about forcefully expressing their views while at the same time fully and fairly considering the views of their fellow directors, and that the members of the board have the experience and ability to critically evaluate the performance of our Chairman and CEO in implementing the strategic, as well as day to day, goals of the Company. Although the board periodically evaluates alternative board governance models and refinements to the existing structure, it believes, after assessing the current service of the Company’s Chairman and CEO and the current composition of the board, that the current board leadership structure is appropriate for the Company.

Independence

The board is required to consistapproval of a majority of independent, non-management directors who meet the criteriavoting power is required to approve business combination transactions and amendments to the Georgia Certificate of Incorporation. The Board believes that a majority voting standard for independence required bymost shareholder actions will ensure that actions may be taken to reflect the NYSE American exchange. Under such rules, a director is independent if he or she does not have a material relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Our board annually evaluates each board member’s independence.

The board has determined that, as of September 24, 2020, five (5)expressed views of the Company’s six (6) incumbent directors are independent under these guidelines: Messrs. Baileys, Burleson, Ford, Turner and Mills. Mr. Thornton, as a management director, also participates in the board’s activities and provides valuable insights and advice. Each memberholders of our audit and compensation committees is an independent director both under the general definition for board independence as well as any separate independence criteria for service on the applicable committee whether required by the SEC, the NYSE American exchange or SunLink. Independence requirements for committee service are set forth in the respective committee charters.

The non-management directors meet periodically in executive session without the management director present. The executive sessions of non-management directors are presided over by the director who is the chairperson of the committee responsible for the issue being discussed. General discussions, such as the review of the Company’s overall performance, are presided over by the chairperson or a director elected by a majority of the non-management directors.voting power, rather than requiring that a two-thirds super majority of the Company’s outstanding shares be voted in favor of a proposal, which can result in the failure of such action to be approved when too many shareholders simply fail to vote either for or against the action.

Role

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every business activity. Accordingly, the board’s primary role with respect to risk is to ensure that the Company’s management implements appropriate procedures designed to identify and, where possible, quantify and/or mitigate risks. The board administers its risk oversight function both at a board level and through its various committees. Our board committees consider, among other things, risk issues within their areas of responsibilities. For example: The audit committee oversees the accounting and financial reporting process, the adequacy of our risk-related internal financial controls, internal audit, the impact of risks on our current financial position, and related compliance matters. The compensation committee oversees the annual performance evaluations of executive management, succession planning, and the evaluation of risks that may be implicated by the Company’s compensation structure. The responsibilities of certain individual committees are discussed in greater detail elsewhere in this Proxy Statement.

Director Share Ownership

SunLink believes that each director should have a personal investment in the Company. Each outside director (or future outside director, as the case may be) is required to own at least one thousand (1,000) common shares of SunLink. Each outside director (or future outside director, as the case may be) must maintain ownership of such number of common shares until such outside director ceases to serve as a member of the board. Each of our incumbent directors has complied with such ownership requirement since at least July 1, 2008.

Annual Meeting Attendance

Although we do not have a formal policy regarding attendance by members of the board at our annual meeting of shareholders, the board encourages all of its members to attend the annual meeting of shareholders. In November 2019, all director nominees and all then directors were personally present at the annual meeting of shareholders, except Mr. Mills.

Communications by and with Directors

In connection with the proper discharge of their duties, our independent non-management directors have access to individual members of management or to other employees of the Company on a confidential basis. Likewise, in connection with the discharge of their duties, non-management directors—as authorized by the board or a committee thereof—also have access to Company records and files, and our directors may contact other directors without informing Company management of the purpose or even the fact of such contact.

Shareholders may communicate with the board, board committees, non-employee directors as a group, and individual directors by submitting their communications in writing to SunLink Health Systems, Inc., 900 Circle 75 Parkway, Suite 690, Atlanta, Georgia 30339 Attention: Corporate Secretary. Any communication should contain (i) a representation that the shareholder is a holder of record of our common shares; (ii) the name and address, as they appear on our books, of the shareholder sending the communication; and (iii) the number of our common shares that are beneficially owned by such shareholder.

Our corporate secretary will forward communications to the intended recipients unless the communication is unduly hostile, threatening, illegal or similarly inappropriate, in which case our corporate secretary has the authority to discard the communication or to take appropriate legal action regarding the communication. Similarly, unsolicited advertisements or invitations to conferences or promotional material, in the discretion of our corporate secretary or her designee, may not be forwarded to the directors.

Related Party Transactions

The Company is subject to a variety of prohibitions on, or approval procedures with respect to, related party transactions.

First, the Company is subject to certain of the NYSE American exchange requirements which require shareholder approval of certain related party transactions. Second, the Company’s Code of Conduct prohibits related party transactions which could give rise to a conflict of interest including, but not limited to, employment by third parties that do business with the Company; conducting business, not on behalf of the Company, with the Company’s vendors, suppliers, and contractors; representing the Company in any transaction where such person representing the Company has a substantial personal interest; disclosure or use of confidential or inside information about the Company for personal gain; competition with the Company in any purchase, sale or ownership of property, property rights or interests; performing services for vendors or competitors of the Company; service on any board of directors or trustees that might conflict with the Company’s interests and; the acceptance of any faculty or speaker positions and any honoraria in connection therewith. A related party transaction must be approved by the Company’s compliance committee, or, in the case of a member of the board and/or an executive officer, such related party transaction must be approved by the board’s audit committee, with such action reported to the Company’s independent directors. To assist in identifying related party transactions, each director and executive officer is required, annually, to submit a Conflict of Interest Disclosure Statement. We have not adopted formal standards for the approval of related party transactions, but instead the compliance committee or the board reviews these transactions on a case-by-case basis and may approve such transactions that are in, or not inconsistent with, the best interests of the Company and its shareholders.

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Dr. Steven J. Baileys, 66, is a private investor and was Chairman of the Board of Directors of SafeGuard Health Enterprises, Inc., a public dental care benefits company, from July 1995 to June 2004. Dr. Baileys was Chief Executive Officer of SafeGuard from April 1995 to February 2000, its President from December 1981 until May 1997, and its Chief Operating Officer from December 1981 until April 1995. Dr. Baileys is licensed to practice dentistry in the State of California. Dr. Baileys was deemed qualified to serve on the board for the reasons set forth below under Director Qualifications, including his business experience set forth herein.

Gene E. Burleson, 79, is a private investor and was Chairman of PET DRx Corporation from June 2005 to July 1, 2010 and its Chief Executive Officer from October 2008 until its acquisition by VCA Antech in July 2010. Mr. Burleson was a director of HealthMont Inc. from September 2000 until its acquisition by SunLink in October 2003. Mr. Burleson served as Chairman of Mariner Post-Acute Network, Inc. from January 2000 to June 2002. Mr. Burleson was Chairman of the Board of GranCare Inc. from October 1990 to November 1997 and President and Chief Executive Officer of GranCare Inc. from December 1989 to February 1997. From June 1986 to March 1989, Mr. Burleson served as President, Chief Operating Officer, and Director of American Medical International Inc. (“AMI”). Mr. Burleson served as Managing Director of AMI’s international operations from May 1981 to June 1986. Mr. Burleson was deemed qualified to serve on the board for the reasons set forth below under Director Qualifications, including his business experience set forth herein.

C. Michael Ford, 81, has been President of Ocmulgee Land Trust, Inc. since July 2011. Mr. Ford was the Chief Executive Officer of Newtown Macon, Inc. from December 2003 to March 2014. He was Chairman of the Board of In Home Health, Inc. from February 2000 to December 2000. Mr. Ford also served as Vice President of Development of Columbia/HCA Healthcare Corporation from September 1994 to September 1997 and was Vice President of Marketing of Meditrust Corp. from October 1993 to September 1994. Mr. Ford was deemed qualified to serve on the board for the reasons set forth below under Director Qualifications, including his business experience set forth herein.

Christopher H. B. Mills, 67, is a Director and the Chief Investment Officer of Harwood Capital Management and has served in such capacity since October 30, 2011. Mr. Mills also serves as the Managing Director/Investment Manager of North Atlantic Smaller Companies Investment Trust plc and Chairman of RenalytixAI, a Nasdaq listed business; positions he has held since 1998. From January 1993 until October 2011, Mr. Mills was a Director and the Chief Investment Officer of J. O. Hambro. From 1984 to 1993, Mr. Mills was a Director of MIM Management Limited. Mr. Mills was deemed qualified to serve on the board for the reasons set forth below under Director Qualifications, including his business experience set forth herein.

Howard E. Turner, 78, has been a partner in the law firm of Smith, Gambrell & Russell, LLP, since 1971. Mr. Turner has served in the past as a director of Avlease, Ltd., a lessor of large commercial aircraft, and as an officer and director of Historic Motorsports Holdings, Ltd. Mr. Turner provides legal services to the Company through the law firm, Smith, Gambrell & Russell, LLP, as requested by the Company. Mr. Turner was deemed qualified to serve on the board for the reasons set forth below under Director Qualifications, including his business experience set forth herein.

Nomination Procedures and Shareholder Nominations

The board does not have a nominating committee but has adopted a nominating resolution which provides that the board believes it to be in the best interest of the Company and the best interest of the Company’s shareholders to authorize the entire board to identify and nominate, by majority vote of the entire board then in office, directors to serve on the Company’s board so long as, pursuant to rules of the NYSE American exchange director nominees so selected are approved by a majority of the independent directors and, when vacancies occur on the board which are to be filled, that the board will actively seek individuals qualified to become board members based on business experience, professional expertise, industry experience, and diversity. Shareholders who wish to submit nominees for election at an annual or special meeting of shareholders should follow the procedure generally described in Requirements, Including Deadlines, For Submission of Proxy Proposals,

Nomination of Directors and Other Business of Shareholders on page 30 of this Proxy Statement and more particularly, in the Company’s Code of Regulations. The board applies the same standards in considering candidates submitted by shareholders as it does in evaluating candidates submitted by members of the board. The board does not have a separate policy regarding the consideration of candidates recommended by shareholders other than the process provided in the nominating resolution.

Director Qualifications

The board concluded that each continuing director and each director nominated for re-election was qualified to serve as a director of SunLink and recommended the nominees for election or re-election at the current year’s annual meeting. No single factor was more important than any other factor in the evaluation of any director or selection of any director nominee and the board made its determination on the basis of its own experience and subjective evaluation of each individual, with reference to various objective criteria required by law or other regulatory requirements, including but not limited to independence requirements and stock exchange regulations, as well as the subjective criteria that each director has deemed desirable in evaluating nominations.

Each director nominated for re-election and each continuing director was deemed by the board to have: met applicable legal and regulatory definitions of independence excluding from such independence determination only Mr. Thornton, the Company’s sole management director; met the criteria set forth in the Company’s corporate governance guidelines; a reputation for and to have displayed, personal integrity, and judgment; achieved professional prominence in their business careers; manifested concern for the interests of the Company’s shareholders; sufficient time available for service on the SunLink board taking into account such person’s other professional and personal commitments; demonstrated a commitment to the Company based on their current and historical service to the Company as a director and/or as an executive officer of the Company; a general understanding of marketing, finance, and other disciplines relevant to the success of a publicly traded company in today’s business environment; and knowledgevoting power with respect to the current state of the Company based on their current and historical service to the Company as a director and/or as an executive officer of the Company.

Board members with long board service to the Company (Baileys, Burleson, Ford, Mills, Thornton, and Turner), prior experienceSeries C Fractional Interests included in the healthcare services industry (Burleson, Ford, and Thornton), current and prior experience providing legal services to clients in the healthcare industry (Turner), prior experience in businesses ancillary to the healthcare services industry (Burleson, Ford, Mills and Thornton), or a combination thereof, as set forth in greater detail in their individual biographies, were deemed to have applicable industry or related industry experience relevant to the Company. Board members identified in greater detail in their individual biographies as having served as officers of other healthcare services providers (Burleson, Ford, Mills and Thornton) or a current officer of the Company (Thornton) were deemed to have had operational experience relevant to the Company. Directors identified elsewhere in this Proxy Statement in greater detail as serving on specific committees of the board were deemed to have experience in matters relevant to their current committee assignments including executive compensation (Baileys and Burleson) and financial expertise (Ford and Burleson). Each director identified in greater detail in their biographies as a nominee or continuing director of SunLink or as having served as an officer, director or both of one or more other public companies (Baileys, Burleson, Thornton, and Mills) was deemed to have experience relevant to SunLink as a public company and to the discharge of the duties of such persons as directors of a public company. Each non-management director with prior CEO experience (Baileys, Burleson, and Ford) and corporate legal experience (Turner) was deemed to have experience relevant to their oversight of the Company’s management in general and its CEO in particular. Each director identified in their biography as having applicable healthcare services industry experience (Baileys, Burleson, Ford, and Thornton), or healthcare legal experience (Turner) was deemed to have applicable industry regulatory experience. Each director identified as having experience in industries which are or have been highly competitive (all) or highly regulated, especially the financial services industries (Mills), were deemed to have experience relevant to the Company in its own business which is both highly competitive as well as highly regulated. Each director was deemed of sufficient age and maturity to have accumulated the life experiences,

viewpoints, and expertise necessary to perform the duties of a public company director, as well as being able to vigorously perform his or her duties as a director of the Company.

The board conceptualizes diversity expansively to include differences of viewpoint, professional experience, and skill sets, especially in matters of healthcare service operations and regulations, financing, marketing, and human resources, as well as a subjective determination of individual qualities, attributes, and differences. The board has taken into account the benefits of, but has not ascribed any specific weight to, or adopted any formal policy with respect to, matters of geographic and cultural background, race, and gender. The board evaluates each individual in the context of the board as a whole, with the objective of recommending a group that can best facilitate the success of SunLink’s business and represent shareholder interests through the exercise of sound judgment using its diversity of experience. The board evaluates each incumbent director to determine whether such director should be nominated to stand for re-election based on the types of criteria outlined above as well as the director’s contributions to the board during their current term. Because the assessment of the diversity of the board as well as the effectiveness of the current factors in achieving diversity from a variety of perspectives is based on the individual subjective evaluation of each of the board members, the Company does not engage in any formal benchmarking procedure.

Board Meetings

The board of directors held seven (7) meetings during fiscal 2020. The board had four (4) standing committees during fiscal 2020: an executive committee, an audit committee, a compensation committee and a strategic planning committee. Each standing committee had the right to retain, in the fiscal year ended June 30, 2020, its own legal and other advisors. During the fiscal year ended June 30, 2020, all directors, except Mr. Mills, attended 75% or more of the meetings of the full board. During the fiscal year ended June 30, 2020, all directors attended 75% or more of the meetings of the individual committees of the board upon which they served.

Committees of the Board—Overview

Membership On Board Committees

This table lists the four (4) board committees in existence during our last fiscal year and the directors who currently serve on them and the number of committee meetings held in the fiscal year ended June 30, 2020.table.

The audit committee has adopted a procedure to receive allegations on any fraudulent accounting issues through a toll-free telephone number and email as set out in the Company’s Code of Conduct.

Each member of the audit committee is independent as defined in Section 803(A) of the NYSE American exchange Company Guide and Rule 10A-3 of the Exchange Act. The board has also determined that Mr. Ford meets the requirements for being an “audit committee financial expert” pursuant to Section 407 of the Sarbanes-Oxley Act of 2002. Our audit committee charter is available on our website at www.sunlinkhealth.com.

Compensation Committee

Composition; Independence; Insider Participation

Our compensation committee is composed entirely of independent members of the board. Each of the two (2) members of the compensation committee are independent, as defined in Section 803(A) of the NYSE American exchange Company Guide and each of them qualifies as an “outside director” (as such term is defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations thereunder). Our compensation committee charter is available on our website at www.sunlinkhealth.com. No member of the committee is a current or former employee or officer of the Company or any of its affiliates.

Compensation Review Process; Management Participation in Compensation Determinations

The compensation of our executive officers is determined by the compensation committee on an annual basis subject to minimum compensation thresholds pursuant to employment agreements and letters previously

approved by the committee. Our compensation committee considers all elements of compensation in making its determinations. With respect to those executive officers who do not serve on our board, the committee also considers the recommendations of our chairman of the board and chief executive officer. The compensation committee meets at various times during the year, and it also considers and takes action by written consent. The compensation committee chairperson reports on committee actions and recommendations at board meetings.

Responsibilities

The compensation committee has the power and authority of the board to perform and performs the following duties and responsibilities:

Executive Committee

The executive committee is empowered to exercise all the authority of the board except as to matters not delegable to a committee under the General Corporation Law of Ohio.

Strategic Planning Committee

Pursuant to guidelines established by the board, the Strategic Planning Committee is empowered to review offers to purchase more than 20% of the Company’s outstanding common shares and provide analysis to the board in connection with the evaluation of any such offers by the full board.

COMPENSATION OF DIRECTORS FOR FISCAL YEAR 2020

Management Directors

We do not pay directors who are also our employees any additional compensation for serving as a director, other than customary reimbursement of expenses.

Non-Management Directors

The Company believes that the compensation of non-management directors should be at a level which is sufficient to attract talented and diverse individuals to serve on the Company’s board while, at the same time, avoiding compensation levels where the level of compensation might present the appearance of a potential lack of director independence. However, in recent years, the board has limited director compensation in light of the Company’s recent financial performance to levels below those which the board would otherwise deem appropriate.

The following chart discloses the compensation of each non-management director for the fiscal year ended June 30, 2020:

The following chart discloses certain information with respect to option awards held by each non-management director as of the fiscal year ended June 30, 2020:

EXECUTIVE OFFICERS

Our executive officers, as of September 24, 2020, their positions with the Company or our subsidiaries, and the ages of such executive officers are as follows:

Current Executive Officers

All of our executive officers hold office for an indefinite term, subject to the discretion of the board.

Biographical information for our non-director executive officers is set forth below:

Mark J. Stockslager, 61, has been SunLink’s Chief Financial Officer since July 1, 2007. He was interim Chief Financial Officer from November 6, 2006 until June 30, 2007. He has been the Principal Accounting Officer since March 11, 1998 and was Corporate Controller from November 6, 1996 to June 4, 2007. He has been associated continuously with our accounting and finance operations since June 1988 and has held various positions, including Manager of U.S. Accounting, from June 1993 until November 1996. From June 1982 through May 1988, Mr. Stockslager was employed by Price Waterhouse & Co.

Byron D. Finn, 70, has been President of SunLink ScriptsRx, LLC since October 1, 2010. Previously, Mr. Finn was President of Byron D. Finn, CPA, PC, which provided accounting, financial consulting, and litigation support services for clients, including numerous healthcare clients. His experience also includes various positions with The Coca-Cola Company, where he served in a number of financial-related positions and in connection with special projects, and he was previously employed by Ernst & Young. Mr. Finn is a licensed CPA and received his Bachelor of Business Administration and Master of Accountancy degrees from the University of Georgia.

Sheila G. Brockman, 60, has been Vice President of SunLink since November 11, 2019 and the Chief Executive Officer of Southern Health Corporation of Houston, Inc., since February 11, 2020. Ms. Brockman was the CEO of Southern Health Corporation of Ellijay, Inc. from April 1, 2017 until its sale on March 17, 2019. She has been continuously with SunLink since July 7, 2003, with a variety of responsibilities including mergers and acquisitions and risk management. Prior to 2003 Ms. Brockman held various financial and management positions in several wireless technology and civil engineering companies.28

Pension Benefits under Plan

Securities Authorized for Issuance under Equity Compensation Plans

The following provides tabular disclosure of the number of securities at June 30, 2020 to be issued upon the exercise of outstanding options, the weighted average exercise price of outstanding options and the number of securities remaining available for future issuance under equity compensation plans, reported by two categories - plans that have been approved by shareholders and plans that have not been so approved:

Mark J. Stockslager. Mr. Stockslager, Chief Financial Officer and Principal Accounting Officer is currently employed by the Company under the terms of an employment letter effective January 1, 2001. Mr. Stockslager’s current employment letter provides for a salary of at least $7,333 per month or $88,000 on an annualized basis, which will be reevaluated at least annually to determine if any adjustments should be made. Currently, Mr. Stockslager’s salary is $15,833 per month or $190,000on an annualized basis. Additionally, Mr. Stockslager is also eligible to receive an annual bonus of up to sixty percent of his annual base salary if criteria established by the compensation committee are met. Mr. Stockslager is eligible to participate in the Company’s employee equity compensation plans if equity is available thereunder and if the compensation committee decides to grant him additional equity compensation. Mr. Stockslager is eligible to participate in the Company’s medical, dental, life and disability programs. Except as described below with respect to payments in connection with a change in control, if Mr. Stockslager is terminated, other than for cause, as determined by the board in its sole discretion, he is entitled to severance pay by continuation of his base salary for nine months.

Byron D. Finn. Mr. Finn, President, SunLink ScriptsRx, LLC is currently employed by the Company under the terms of an employment letter effective September 30, 2010. Mr. Finn’s current employment letter provides for a salary of $16,667 per month or $200,000 on an annualized basis, which will be reevaluated at least annually to determine if any adjustments should be made. Currently, Mr. Finn’s salary is $17,500 per month or $210,000on an annualized basis. Additionally, Mr. Finn is eligible to receive an annual bonus of up to sixty percent of his annual base salary if criteria established by the compensation committee are met. Mr. Finn is eligible to participate in the Company’s employee equity compensation plans if equity is available thereunder and if the compensation committee decides to grant him equity compensation. Mr. Finn is eligible to participate in the Company’s medical, dental, life, and disability programs. If Mr. Finn is terminated, other than for cause, Mr. Finn will be entitled to receive severance pay by continuation of his base salary for six months.

Sheila G. Brockman. Ms. Brockman, Vice President of SunLink and Chief Executive Officer of Southern Health Corporation of Houston, Inc. is currently employed by the Company under the terms of an employment letter effective July 7, 2003. Ms. Brockman’s employment letter provides for a current salary of 12,500 per month or $150,000 on an annualized basis, which is reevaluated at least annually to determine if any adjustment should be made. Additionally, Ms. Brockman is also eligible to receive an annual bonus of up to thirty percent of her annual base salary if criteria established by the compensation committee are met. Ms. Brockman is eligible to participate in the Company’s medical, dental, life and disability programs.

Change in Control Arrangements

With regard to the employment agreements with Mr. Thornton, Mr. Stockslager, and Mr. Finn, a “change in control” will be deemed to have occurred in the event that any of the following events shall have occurred (with defined terms, not otherwise defined herein, having the meanings associated with them in the employment agreements):

Upon a change in control, if Mr. Thornton’s employment is thereafter terminated for any reason other than cause or if he terminates his employment within one year of the change in control, he is entitled to (a) thirty months of base pay, to be paid in accordance with the Company’s payroll practices; (b) accrued compensation, including a pro rata portion of any annual bonus for which goals have been proportionately met; (c) health and certain ancillary benefits for twenty four months following termination; and (d) full vesting of any then unvested stock options.

Upon a change in control, if Mr. Stockslager’s employment is thereafter terminated for any reason other than cause or if he terminates his employment within one year of the change-in-control, he is entitled to twelve months of base pay, to be paid in accordance with the Company’s payroll practices.

Upon a change in control, if Mr. Finn’s employment is terminated within 90 days thereafter for any reason other than death, disability or cause, he is entitled to six months of base pay, to be paid in accordance with the Company’s payroll practices.

With regard to the employment agreements for Ms. Brockman, under the terms of a retention plan applicable to certain non-executive officers in the year ended June 30, 2020, Ms. Brockman was entitled to six months of base pay, to be paid within sixty (60) days after the date of termination of her employment, if the Company experienced a “change in control” (as defined in such plan). Such plan expired in September 2020. Although the Company is considering the adoption of a new retention plan for certain non-executive officers, Ms. Brockman is not expected to participate in such plan. However, in light of the expiration of the retention plan and her designation as an executive officer of the Company, and subject to approval by the Company’s compensation committee and board, it is anticipated that Ms. Brockman will receive a new employment letter which will provide her with a change of control severance benefit consistent with the change of control benefits provided to the Company’s other executive officers (other than the Company’s CEO).

The following table sets forth certain potential benefits which would have been realized in connection with a change in control and termination of employment without cause or at the election of the executive for the

Company’s principal executive officer, principal financial officer, and the Company’s named executive officers for fiscal year 2020 assuming the change in control and termination occurred as of the last day of the most recently completed fiscal year.

PROPOSAL 2 TO BE VOTED ON BY SHAREHOLDERS

Proposal 2—Ratification of Independent Registered Public Accounting Firm

Cherry Bekaert LLP, an independent registered public accounting firm (“Cherry Bekaert”), was engaged to perform the Company’s annual audit for the fiscal year ended June 30, 2020. We anticipate that representatives of Cherry Bekaert will be present at the 2020 annual meeting of shareholders to respond to appropriate questions and to make a statement if such representatives so desire.

The audit committee has appointed Cherry Bekaert to serve as the Company’s independent registered public accounting firm for the fiscal year beginning July 1, 2020. We are asking our shareholders to ratify the selection of Cherry Bekaert. Although ratification is not required by our Code of Regulations or otherwise, the board is submitting the selection of Cherry Bekaert to our shareholders for ratification as a matter of good corporate practice. If the selection is not ratified, the audit committee will consider whether it is appropriate to select another independent registered public accounting firm. Even if the selection is ratified, the audit committee, in its discretion, may select a different independent registered public accounting firm at any time during the year and may periodically request proposals from other independent registered public accounting firms and as a result of such process may select Cherry Bekaert or another independent registered public accounting firm if the audit committee determines that such a change or action would be in the best interests of the Company and our shareholders.

The board of directors unanimously recommends a vote “FOR” the ratification of the appointment of Cherry Bekaert LLP as our independent registered public accounting firm.

PROPOSAL 3 TO BE VOTED ON BY SHAREHOLDERS

Proposal 3— Advisory Vote on Executive Compensation

We are requesting your advisory approval of the compensation of our named executive officers as disclosed in the Executive Compensation section of this Proxy Statement, including the compensation tables, and the narrative discussion set forth on pages 20 to 25 of this Proxy Statement. This non-binding advisory vote is commonly referred to as a “say on pay” vote.

Our compensation committee, which is responsible for designing and administering our executive compensation program, has designed our executive compensation program to provide a competitive compensation and benefits package that reflects executive performance, job complexity, and strategic value of the position, which it believes also includes retention incentives, performance incentives, and alignment with the interests of the Company’s shareholders. We encourage you to carefully review the “Executive Compensation” section of this Proxy Statement for additional details on the Company’s executive compensation, including the processes our compensation committee used to determine the structure and amounts of the compensation of our named executive officers for the fiscal year ended June 30, 2020.

We are asking you to indicate your support for the compensation of our named executive officers as described in this Proxy Statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the objectives, policies and practices described in this Proxy Statement. Accordingly, we are asking you to vote, on an advisory basis, “For” the following resolution at the Annual Meeting:

“RESOLVED, that the compensation paid to SunLink Health Systems, Inc.’s named executive officers, as disclosed pursuant to the Securities and Exchange Commission’s compensation disclosure rules, including the “Executive Compensation” section of the Proxy Statement, and the compensation tables and narrative discussion set forth therein, is hereby approved.”

While the results of this advisory vote are not binding, the compensation committee will consider the outcome of the vote in deciding whether to take any action as a result of the vote and when making future compensation decisions for our named executive officers.

Vote Required and Board Recommendation

The “say-on-pay” proposal will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against the proposal.

The board of directors unanimously recommends that the Company’s shareholders vote “FOR” the compensation of our named executive officers as disclosed in this Proxy Statement.

PROPOSAL 4 TO BE VOTED ON BY SHAREHOLDERS

Proposal 4— Advisory Vote on the Frequency of the Vote on Executive Compensation

The Company is presenting this proposal, which gives you as a shareholder the opportunity to inform the Company as to how often you wish the Company to include a “say-on-pay” proposal in our Proxy Statement (a “say-on-frequency” vote). While this say-on-frequency vote is advisory in nature and therefore will not bind us to adopt any particular frequency, the board will consider the shareholder vote resulting from the proposal in determining how frequently we will hold “say-on-pay” votes.

Please note that, as a shareholder, you have the choice to vote for one of the following choices, as indicated on the proxy card: to hold the advisory vote on executive compensation (1) every year, (2) every two years, (3) every three years, or (4) to abstain from voting.

The board values constructive dialogue on executive compensation and other important governance topics with our shareholders. Because the executive compensation program for our named executive officers has remained consistent since at least 2017 and since the compensation committee does not contemplate any change to the compensation structure in the foreseeable future, the board believes an advisory vote every three years should be sufficiently frequent to obtain information on shareholder sentiment about our executive compensation program and to respond to shareholders’ feedback and the vote results.

Required Vote of Shareholders

Shareholders are not voting to approve or disapprove the recommendation of the Board that the say-on-pay vote be held every two years, but, rather, to express their own preference. The board will take into consideration the shareholder vote on each of the alternatives set forth in the proxy card with respect to this Proposal.

The board of directors unanimously recommends that the Company’s shareholders vote for the “3 Years” alternative set out in the proxy card.

CERTAIN ACCOUNTING AND AUDITING MATTERS

Report of the Audit Committee

The authority, duties, and responsibilities of the audit committee are set forth in detail in the written audit committee charter, which was adopted by the board and which complies with the applicable rules of the NYSE American exchange. The audit committee has two (2) members, each of whom is independent under the applicable rules of the NYSE American exchange. In accordance with section 407 of the Sarbanes-Oxley Act of 2002, Mr. Ford has been identified as an “Audit Committee Financial Expert.”

The audit committee reviews and assesses the adequacy of its charter on an annual basis. A copy of the Audit Committee Charter is available on the Company’s website at www.sunlinkhealth.com.

The audit committee is responsible for overseeing the Company’s financial reporting process on behalf of the board. Management of the Company has the primary responsibility for the Company’s financial reporting process, principles, and internal controls as well as preparation of its financial statements in accordance with generally accepted accounting principles. The Company’s independent auditors are responsible for performing an audit of the Company’s financial statements and expressing an opinion as to the conformity of such financial statements with generally accepted accounting principles in the United States.

The audit committee met four (4) times during fiscal year 2020. In addition, the members of the audit committee reviewed, and the chairperson of the audit committee discussed with management and the Company’s independent auditors, the interim financial information contained in each quarterly earnings release prior to the release of such information to the public.

The audit committee has reviewed and discussed the Company’s audited financial statements as of and for the year ended June 30, 2020 with management and representatives of Cherry Bekaert. The audit committee has discussed with representatives of Cherry Bekaert the matters required to be discussed under Standards of the Public Company Accounting Oversight Board (“PCAOB”), including those matters set forth in Auditing Standards No. 1301, Communication with Audit Committees. In addition, the audit committee received from Cherry Bekaert the written disclosures and the letter required by the PCAOB’s applicable requirements and has discussed with representatives of Cherry Bekaert its independence from the Company and its management. The audit committee also considered whether Cherry Bekaert’s provision of non-audit services to the Company is compatible with maintaining Cherry Bekaert’s independence. The audit committee has concluded that the independent auditors are independent from the Company and its management.

The audit committee discussed with Cherry Bekaert the overall scope and plans for their services. In addition, the audit committee met with the Chief Executive Officer and Chief Financial Officer of the Company to discuss the processes that they have undertaken to evaluate the accuracy and fair presentation of the Company’s financial statements and the effectiveness of the Company’s system of disclosure controls and procedures.

In fulfilling its oversight responsibilities and as part of its review of the Company’s 2020 Annual Report, the audit committee met with representatives of Cherry Bekaert, with and without management present, to discuss their evaluations of the Company’s internal controls as well as the overall quality of its financial reporting.

The fees paid to Cherry Bekaert, as well as the policy on pre-approval of audit and non-audit services are set forth elsewhere in this Proxy Statement.

As a result of the reviews and discussions with management and Cherry Bekaert referred to above, the audit committee recommended to the board and the board has approved that the audited financial statements of the Company be included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2020 for filing with the SEC.

This report has been submitted by the audit committee:

The foregoing report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933.

Policy on Pre-Approval of Services Provided by Independent Registered Public Accounting Firm

Pursuant to the requirements of the Sarbanes-Oxley Act of 2002, the terms of the engagement of the Company’s independent registered public accountant with respect to all auditing services and non-audit services to be performed for the Company by the Company’s independent registered public accountants is subject to the specific pre-approval of the audit committee (except where such services are determined to be de minimis under the Exchange Act). All audit and permitted non-audit services to be performed by Cherry Bekaert require pre-approval by the audit committee in accordance with pre-approved procedures established by the audit committee. The audit committee may delegate to one or more designated members of the audit committee the authority to grant such pre-approvals. The decisions of any member to whom such authority is delegated are presented to the full audit committee at the next scheduled meeting of the audit committee. The procedures require all proposed engagements of the Company’s independent registered public accountants for services of any kind to be directed to the Company’s Principal Accounting Officer and then submitted for approval to the audit committee prior to the beginning of any services.

In fiscal year 2020, 100% of the audit fees, audit-related fees, and tax fees billed by Cherry Bekaert were approved either by the audit committee or its designee. The fees billed by Cherry Bekaert that are shown in the following table for fiscal year 2020 and 2019 were also pre-approved by the audit committee or its designee. The audit committee has considered whether the provision of non-audit services by Cherry Bekaert is compatible with maintaining the independence of such independent registered public accounting firm and believes that the provision of such services is compatible.

Independent Registered Public Accounting Firm Fees

The following tables show the type of services and the aggregate fees billed to the Company for such services during the fiscal years ended June 30, 2020 and 2019 by Cherry Bekaert¹. Descriptions of the service types follow the table.

Tax Fees

The aggregate fees billed by Cherry Bekaert in each of the last two fiscal years did not include fees for professional services rendered for tax compliance or assisting the Company with tax audits.

All Other Fees

These fees, if any, generally relate to assistance in connection with regulatory filings and accounting and disclosure consultation.

DELINQUENT SECTION 16(a) REPORTS

Section 16(a) of the Exchange Act requires directors and certain officers of the Company and owners of more than 10% of the Company’s common shares to file an initial ownership report with the Securities and Exchange Commission and subsequent reports reflecting changes in their ownership of the Company’s equity securities. The Company believes, based solely on a review of the copies of those reports furnished to the Company during the past year and written representations to it that no other reports were required, that during the period from July 1, 2019 through June 30, 2020 all filing requirements under Section 16 have been met except: (i) in connection with Ms. Brockman becoming a named executive officer of the Company, Ms. Brockman inadvertently failed to timely file a Form 3 report, which filing was still required even though Ms. Brockman does not own any equity interests in the Company and (ii) Wittenberg Investment Management, Inc. may have failed to file a Form 3 report to report becoming the owner of more than 10% of the Company’s outstanding shares as a result of purchases of shares by the Company pursuant to its share repurchase program which terminated on June  1, 2020.

COST OF SOLICITATION

The cost of solicitation of proxies will be borne by the Company. In addition to the use of the mails, proxy solicitations may be made by directors, officers, and employees of the Company, personally or by telephone or other means of communication, without receiving additional compensation. It is also anticipated that banks, brokerage houses, and other custodians, nominees and fiduciaries will be requested to forward soliciting material to their principals and to obtain authorization for the execution of proxies. The Company will reimburse banks, brokerage houses, and other custodians, nominees, and fiduciaries for their out-of-pocket expenses.

REQUIREMENTS, INCLUDING DEADLINES, FOR SUBMISSION OF PROXY PROPOSALS,

NOMINATION OF DIRECTORS AND OTHER BUSINESS OF SHAREHOLDERS

We plan to hold our 20212023 annual meeting of shareholders during the month of November. AnyUnder SEC rules, any proposal must be received at the Company’s principal executive offices not less than 120 calendar days before the date of the Company’s proxy statement released to shareholders in connection with the previous year’s annual meeting. However, if the Company did not hold an annual meeting the previous year, or if the date of the current year’s annual meeting has been changed by more than 30 days from the date of the previous year’s meeting, then the deadline is a reasonable time before the Company begins to print and send its proxy materials.

Since our 2022 Annual Meeting of Shareholders was held on November 11, 2022, absent a change as described above, any proposal of a shareholder intended to be presented at the 20212023 annual meeting of shareholders must be received by us for inclusion in the Proxy Statement and form of proxy for that meeting no later than June 19, 2021, 100July 14, 2023, 120 days before the anniversary of the date of thisthe Proxy Statement.Statement for our most recent annual meeting in order to comply with SEC Rule 14a-8. If any proposal pursuant to Rule 14a-8 is submitted after that date, we are not required to include it in our proxy materials. Any proposal of a

Further, shareholder proposals intended to be presented at the 20212023 annual meeting of shareholders that isare submitted outside the processes of Rule 14a-8 and that are not required to be included in the Proxy Statement and form of proxy must be received by us for thatour next annual meeting no later than August 13, 2021, 45 days before the anniversarydate on which the Company first sent its proxy materials for the prior year’s annual meeting of shareholders; provided however, if during the prior year the Company did not hold an annual meeting, or if the date of this Proxy Statement. the meeting has changed more than 30 days from the prior year, then notice must be received a reasonable time before the Company sends its proxy materials for the current year. Since our 2022 Annual Meeting of Shareholders was held on November 11, 2022, absent a change as described above, we must receive any proposal of a shareholder intended to be presented at the 2023 annual meeting of shareholders that is not governed by SEC Rule 14a-8 no later than August 14, 2023.