5 days ago
Nursing home operator Genesis Healthcare files for bankruptcy
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Genesis Healthcare, one of the largest providers of skilled nursing facilities in the country, filed for Chapter 11 bankruptcy protections on Wednesday.
Pennsylvania-based Genesis, which operated about 175 skilled nursing facilities across 18 states at its filing, said it struggled with post-pandemic challenges, legacy liabilities and inadequate Medicaid reimbursement. Staff will retain their positions and the filing is not expected to impact patient care, a Genesis spokesperson told Healthcare Dive.
Affiliates of Genesis' investor ReGen Healthcare, a private equity firm, have entered into a deal to acquire Genesis, according to bankruptcy court documents filed Thursday.
ReGen's deal to acquire Genesis is a 'stalking horse bid,' which sets the floor price to buy Genesis in the event of an auction.
The private equity firm has invested in Genesis before, when it was on the verge of filing for bankruptcy for the second time in 2021, according to court documents. The operator had filed for Chapter 11 before in 2000 and emerged from restructuring in 2001.
ReGen's initial $50 million investment in 2021, paired with a lease restructuring agreement with Genesis' largest landlord, allowed the operator to 'narrowly' avoid a bankruptcy filing, according to court documents. The private equity firm continued to invest in Genesis, and its investment totaled about $100 million.
However, liabilities related to past expansions, 'years of financial stress and deferred capital expenditures,' pressures from the COVID-19 pandemic and inadequate Medicaid reimbursement prompted Genesis to file for Chapter 11 protections again on Wednesday.
'All told, while ReGen's cumulative investment of approximately $100 million (over approximately two years) allowed the Company to avoid bankruptcy and provided a liquidity runway to a business struggling with legacy liabilities and other business challenges, it was unfortunately insufficient to allow the Company to fully transform its business model and achieve long-term viability,' Louis Robichaux IV, co-chief restructuring officer, wrote in court documents Thursday.
In initial filings, Genesis said it has up to 25,000 creditors, with liabilities between $1 billion to $10 billion.
Genesis has faced other financial challenges in the past, including a nearly $54 million fine in 2017 from the government to settle allegations it violated the False Claims Act for submitting 'medically unnecessary therapy and hospice services, and grossly substandard nursing care.'
Genesis joins a growing number of notable bankruptcies this year. In January, health system Prospect Medical Holdings filed for Chapter 11 protections. Last year, both medical center operator CareMax and hospital operator Steward Health Care filed for bankruptcy.
Although healthcare bankruptcies declined in 2024, the sector still notched the second-highest number of filings in the past six years.
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