Genesis HealthCare Enters into Agreements with New Generation Health to Transition the Operations of 19 West Coast Facilities...
February 04 2020 - 10:17AM
Genesis HealthCare (Genesis or the Company), one of the nation’s
largest providers of post-acute care services, today announced that
it has entered into a series of agreements with New Generation
Health, LLC (NewGen), a healthcare consulting firm led by
experienced professionals specializing in the operation of skilled
nursing facilities in the Western portion of the United
States. Genesis will transition operational responsibility
for 19 facilities in the states of California, Washington and
Nevada.
Effective February 1, 2020, Genesis sold the real estate and
operations of six skilled nursing facilities and transferred the
leasehold rights to 13 skilled nursing, behavioral health and
assisted living facilities, for a total of $79 million.
Genesis will retain an indirect 50% interest in the
facilities. Net transaction proceeds were used by Genesis to
repay indebtedness and fund its indirect investment. Genesis
is currently assessing whether it will continue to consolidate the
financial statements of these facilities for financial reporting
purposes.
Concurrently, the facilities have entered, or will enter upon
regulatory approval, into management services agreements with
NewGen for the day-to-day operations of the facilities. Genesis
will continue to provide administrative and back office services to
the facilities pursuant to administrative support agreements, as
well as therapy services pursuant to therapy services
agreements.
“Our relationship with NewGen creates a west coast senior care
provider with the flexibility of an independent, local or regional
operator, but with the backing of a robust national platform,”
noted George V. Hager, Jr., Chief Executive Officer of Genesis.
“This relationship is another example of the creative models we
have employed to execute on our portfolio optimization
strategy. This transaction enables Genesis to leverage
NewGen’s commitment of capital as well as its extensive experience
and intimate knowledge of the west coast skilled nursing market,
allowing for increased operational focus on our core strategic
markets where we have functional and geographic density.”
About Genesis Healthcare, Inc. Genesis
Healthcare, Inc. (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 nearly 400 skilled nursing
facilities and assisted/senior living communities in 26 states
nationwide. Genesis subsidiaries also supply rehabilitation and
respiratory therapy to approximately 1,200 healthcare providers in
44 states, the District of Columbia and China. References
made in this release to "Genesis," "the Company," "we," "us" and
"our" refer to Genesis Healthcare, Inc. and each of its
wholly-owned companies. Visit our website at
www.genesishcc.com.
Forward-Looking StatementsThis
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;
- 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;
- 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; and
- 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.
The Company’s Annual Report on Form 10-K for the
year ended December 31, 2018, 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.
CONTACT: Investor Relations Lori Mayer, Genesis
HealthCare 610-925-2000
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