OTC:GBCS
SELECTIS HEALTH, INC.
A healthcare services provider facing persistent operating losses but showing recent revenue stabilization and significant gross margins relative to its size.
Key Metrics
Investment Thesis
Bull Case
Investors might consider this stock for its recent revenue recovery and ability to generate positive gross margins, which could be leveraged if expense structures are optimized. The company's significant non-cash adjustments suggest accounting practices that may inflate earnings quality relative to cash flow metrics. Potential undervaluation exists given the asset base of $33.4M total assets versus market cap.
Bear Case
Avoid this stock due to the critical negative shareholders' equity position and a retained earnings deficit of -$20.2M that requires immediate attention. The company burns cash with net changes in cash of -$912k and relies on financing activities, evidenced by $-1.5M cash flow from financing, to cover operational gaps. High leverage ratios and current liabilities of $19.6M against limited liquid assets create a precarious financial structure.
About SELECTIS HEALTH, INC.
SELECTIS HEALTH (GBCS) operates in the healthcare services sector, providing specialized medical solutions to diverse market segments. The company has demonstrated resilience with revenue recovering to $39.5M in 2024 after a dip in 2023, though it continues to report net losses around $2.4M annually.
Analysis
Management Discussion
Management has successfully stabilized revenue at $39.5M in 2024, matching pre-pandemic levels, but continues to struggle with profitability as net income remains at -$2.4M. Operating expenses of $42.2M significantly exceed gross profit, resulting in an operating loss of -$2.7M and a substantial decline in cash reserves from $2.3M to $1.4M over the period.
Industry Overview
The healthcare services industry is characterized by high barriers to entry and regulatory scrutiny, often requiring significant capital investment in facilities and compliance. Companies in this sector frequently face margin pressure from rising operational costs and reimbursement rate fluctuations, making profitability challenging even for established players.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $40.6M | $36.8M | $39.5M |
| Cost of Revenue | $0 | $0 | $0 |
| Gross Profit | $40.6M | $36.8M | $39.5M |
| Operating Expenses | $40.9M | $45.7M | $42.2M |
| Operating Income | $-286.6K | $-9.0M | $-2.7M |
| G&A | $7.9M | $10.0M | $9.2M |
| D&A | $1.8M | $1.7M | $1.6M |
| Depreciation | $1.8M | $1.7M | — |
| Amortization | $316.0K | $347.8K | $103.4K |
| Other OpEx | $33.0M | $35.8M | $33.0M |
| Non-Operating Income | $0 | $0 | $0 |
| Interest Expense | $2.2M | $2.2M | — |
| Pre-Tax Income | $-286.6K | $-9.0M | $-2.7M |
| Income Tax | $2.1M | $-5.0M | $-305.2K |
| Continuing Ops | $-2.4M | $-4.0M | $-2.4M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $-2.4M | $-4.0M | $-2.4M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $-2.4M | $-4.0M | $-2.4M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Current Assets | $5.0M | $5.0M | $3.5M |
| Cash & Equivalents | $1.4M | $1.5M | $680.3K |
| Accounts Receivable | $2.9M | $2.1M | $2.6M |
| Prepaid Expenses | $637.7K | $1.4M | $233.2K |
| Other Current Assets | $0 | $0 | $0 |
| Long-Term Assets | $37.5M | $35.7M | $29.9M |
| PP&E (Net) | $35.5M | $33.8M | $28.1M |
| Goodwill | $1.1M | $1.1M | $1.1M |
| Other LT Assets | $996.4K | $820.1K | $711.6K |
| Total Assets | $42.5M | $40.7M | $33.4M |
| Current Liabilities | $6.8M | $18.1M | $19.6M |
| Current Debt | $2.3M | $11.2M | $11.5M |
| Other Current Liab | $4.5M | $6.9M | $8.1M |
| Long-Term Liabilities | $34.7M | $25.5M | $19.2M |
| Long-Term Debt | $34.4M | $25.2M | $19.1M |
| Other LT Liab | $291.4K | $312.8K | $96.9K |
| Total Liabilities | $41.5M | $43.6M | $38.9M |
| Shareholders' Equity | $952.8K | $-3.0M | $-5.4M |
| Paid-In Capital | $13.8M | $13.9M | $13.9M |
| Retained Earnings | $-13.7M | $-17.7M | $-20.2M |
| Total L&E | $42.5M | $40.7M | $33.4M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $-2.4M | $-4.0M | $-2.4M |
| Non-Cash Adjustments | $3.9M | $-577.9K | $-530.9K |
| Working Capital Changes | $-1.8M | $5.1M | $1.1M |
| Cash from Operations | $-305.1K | $536.7K | $-1.8M |
| Capital Expenditures | $222.4K | $29.8K | $36.1K |
| Cash from Investing | $-222.4K | $-29.8K | $2.4M |
| Cash from Financing | $-1.8M | $-618.7K | $-1.5M |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $-2.4M | $-111.9K | $-912.8K |
| Beginning Cash | $4.8M | $2.4M | $2.3M |
| Ending Cash | $2.4M | $2.3M | $1.4M |
Frequently Asked Questions
How does SELECTIS HEALTH, INC. make money?
Revenue is derived primarily from core medical service operations generating a substantial $39.5M gross profit, with additional streams potentially coming from ancillary health services or regional partnerships supported by the company's asset base of nearly $30M in fixed assets.
What are the main risks for GBCS?
The company carries a heavy debt burden with total liabilities of $38.9M against only $-5.4M in shareholders' equity, creating significant insolvency risk; persistent net losses and negative operating cash flow threaten long-term sustainability without new capital injection; high current liabilities relative to current assets indicate potential liquidity crunches.
What is GBCS's competitive advantage?
The company maintains a significant gross margin profile despite operating losses, indicating high-value service delivery; it holds substantial fixed assets and goodwill suggesting established market presence; and its cash flow from investing activities indicates ongoing strategic asset management or divestitures to balance liquidity.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.