Genesis HealthCare Announces Planned Divestiture of Facilities in Texas
April 11 2018 - 08:28PM
Genesis HealthCare (Genesis, or the Company) (NYSE:GEN), one of the
largest post-acute care providers in the United States, today
announced it has signed a definitive agreement to sell 23 Texas
skilled nursing facilities (22 buildings owned by Genesis and one
leased) to Regency REIT, LLC. The transaction is expected to
close on or about July 1, 2018 and is subject to additional due
diligence, regulatory and licensing approvals, and other customary
conditions.
Genesis currently operates or manages a total of 24 facilities
in the state of Texas. In addition to the 23 facilities
expected to be divested in the Regency transaction, Genesis also
plans to exit the operations of an additional leased skilled
nursing facility. Aggregate revenue and EBITDA of all 24
facilities totaled approximately $173.7 million and $7.4 million,
respectively, in 2017. Genesis estimates these transactions will
result in the reduction of approximately $97 million of
indebtedness and $1.8 million of annual cash lease expense. Closing
of both transactions would mark the Company’s complete exit of its
inpatient business in the state of Texas.
“We are constantly reviewing our portfolio with an emphasis on
divesting underperforming assets or assets in non-strategic
markets,” noted George V. Hager, Jr., Chief Executive Officer of
Genesis. “This deleveraging transaction will allow for
additional focus on our core markets and will strengthen our
overall portfolio,” noted Hager.
About Genesis HealthCare
Genesis HealthCare (NYSE:GEN) is a holding company with
subsidiaries that, on a combined basis, comprise one of the
nation's largest post-acute care providers with more than 450
skilled nursing facilities and assisted/senior living communities
in 30 states nationwide. Genesis subsidiaries also supply
rehabilitation and respiratory therapy to more than 1,600
healthcare providers in 46 states, the District of Columbia and
China. References made in this release to "Genesis," "the
Company," "we," "us" and "our" refer to Genesis HealthCare and each
of its wholly-owned companies. Visit our website at
www.genesishcc.com.
Forward-Looking Statements
This release includes “forward-looking statements” within the
meaning of the federal securities laws, including the Private
Securities Litigation Reform Act of 1995. You can identify these
statements by the fact that they do not relate strictly to
historical or current facts. These statements contain words such as
“may,” “will,” “project,” “might,” “expect,” “believe,”
“anticipate,” “intend,” “could,” “would,” “estimate,” “continue,”
“pursue,” “plans,” or “prospect,” or the negative or other
variations thereof or comparable terminology. They include, but are
not limited to, statements about Genesis’ expectations and beliefs
regarding its future financial performance, anticipated cost
management, anticipated business development, anticipated financing
activities and anticipated demographic and supply-demand trends
facing the industry. These forward-looking statements are based on
current expectations and projections about future events, including
the assumptions stated in this release, and there can be no
assurance that they will be achieved or occur, in whole or in part,
in the timeframes anticipated by the Company or at all. Investors
are cautioned that forward-looking statements are not guarantees of
future performance or results and involve risks and uncertainties
that cannot be predicted or quantified and, consequently, the
actual performance of Genesis may differ materially from that
expressed or implied by such forward-looking statements.
These risks and uncertainties include, but are not limited to,
the following:
- reductions and/or delays in Medicare or Medicaid reimbursement
rates, or changes in the rules governing the Medicare or Medicaid
programs could have a material adverse effect on our revenues,
financial condition and results of operations;
- reforms to the U.S. healthcare system that have imposed new
requirements on us and uncertainties regarding potential material
changes to such reforms;
- revenue we receive from Medicare and Medicaid being subject to
potential retroactive reduction;
- our success being dependent upon retaining key executives and
personnel;
- it can be difficult to attract and retain qualified nurses,
therapists, healthcare professionals and other key personnel,
which, along with a growing number of minimum wage and compensation
related regulations, can increase our costs related to these
employees;
- recently enacted changes in Medicare reimbursements for
physician and non-physician services could impact reimbursement for
medical professionals. Moreover, annual payment caps that limit the
amounts that can be paid for outpatient therapy services rendered
to any Medicare beneficiary may negatively affect our results of
operations;
- we are subject to extensive and complex laws and government
regulations. If we are not operating in compliance with these laws
and regulations or if these laws and regulations change, we could
be required to make significant expenditures or change our
operations in order to bring our facilities and operations into
compliance;
- our physician services operations are subject to corporate
practice of medicine laws and regulations. Our failure to comply
with these laws and regulations could have a material adverse
effect on our business and operations;
- we face inspections, reviews, audits and investigations under
federal and state government programs, such as the Department of
Justice. These investigations and audits could result in adverse
findings that may negatively affect our business, including our
results of operations, liquidity, financial condition, and
reputation;
- significant legal actions, which are commonplace in our
industry, could subject us to increased operating costs, which
could materially and adversely affect our results of operations,
liquidity, financial condition, and reputation;
- insurance coverages, including professional liability coverage,
may become increasingly expensive and difficult to obtain for
health care companies, and our self-insurance may expose us to
significant losses;
- failure to maintain effective internal control over financial
reporting could have an adverse effect on our ability to report on
our financial results on a timely and accurate basis;
- we may be unable to reduce costs to offset decreases in our
patient census levels or other expenses timely and completely;
- completed and future acquisitions may consume significant
resources, may be unsuccessful and could expose us to unforeseen
liabilities and integration risks;
- we lease a significant number of our facilities and may
experience risks relating to lease termination, lease expense
escalators, lease extensions, special charges and leases that are
not economically efficient in the current business
environment;
- our substantial indebtedness, scheduled maturities and
disruptions in the financial markets could affect our ability to
obtain financing or to extend or refinance debt as it matures,
which could negatively impact our results of operations, liquidity,
financial condition and the market price of our common stock;
- the holders of a majority of the voting power of Genesis’
common stock have entered into a voting agreement, and the voting
group’s interests may conflict with the interests of other
stockholders;
- exposure to the credit and non-payment risk of our contracted
customer relationships, including as a result from bankruptcy,
receivership, liquidation, reorganization or insolvency, especially
during times of systemic industry pressures, economic conditions,
regulatory uncertainty and tight credit markets, which could result
in material losses;
- some of our directors are significant stockholders or
representatives of significant stockholders, which may present
issues regarding diversion of corporate opportunities and other
potential conflicts; and
- we are a “controlled company” within the meaning of NYSE rules
and, as a result, qualify for and rely on exemptions from certain
corporate governance requirements.
The Company’s Annual Report on Form 10-K for the year ended
December 31, 2016, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K, and other filings with the U.S. Securities and
Exchange Commission, discuss the foregoing risks as well as other
important risks and uncertainties of which investors should be
aware. Any forward-looking statements contained herein are made
only as of the date of this release. Genesis disclaims any
obligation to update its forward-looking statements or any of the
information contained in this release. Investors are cautioned not
to place undue reliance on these forward-looking statements.
Genesis HealthCare Contact:
Investor
Relations
610-925-2000
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