Genesis Health Inc. warns of bankruptcy
By J. Chambless
On Nov. 8, Genesis Health Inc. warned
that it may face bankruptcy if the company doesn't get relief from
In its report to the Securities and Exchange Commission, the company said, “As currently structured, it is unlikely that the company will be able to generate sufficient cash flow to cover required financial obligations, including its rent obligations, its debt-service obligations and other obligations due to third parties.”
Genesis is a leading nursing home operator, and has about a quarter of its 450 facilities in Pennsylvania and New Jersey, including its high-profile building in the heart of Kennett Square.
The company's statement cited “the persistent pressure of health care reforms enacted in recent years” as contributing to their financial situation. Those reforms have been intended to keep the elderly out of nursing homes, or reduce the time they spend in the facilities wherever possible.
“The negative impact of continued reductions in skilled patient admissions, shortening lengths of stay, escalating wage inflation and professional liability losses, combined with the increased cost of capital through escalating lease payments accelerated in the third quarter of 2017,” the Genesis statement said.
Genesis reported that it had entered into preliminary agreements for relief with two of its landlords, units of Sabra Healthcare REIT Inc., and Welltower Inc. Those arrangements call for Sabra and Welltower to sell a number of facilities and for Genesis to then lease them from the new owners at a reduced price.
In the most recent quarter, Genesis reported a net loss of $615 million in revenue of $1.3 billion.