Dive Temporary:
- Genesis Healthcare, one of many largest suppliers of expert nursing services within the nation, filed for Chapter 11 chapter protections on Wednesday.
- Pennsylvania-based Genesis, which operated about 175 expert nursing services throughout 18 states at its submitting, mentioned it struggled with post-pandemic challenges, legacy liabilities and insufficient Medicaid reimbursement. Workers will retain their positions and the submitting isn’t anticipated to influence affected person care, a Genesis spokesperson informed Healthcare Dive.
- Associates of Genesis’ investor ReGen Healthcare, a personal fairness agency, have entered right into a deal to amass Genesis, in keeping with chapter courtroom paperwork filed Thursday.
Dive Perception:
ReGen’s deal to amass Genesis is a “stalking horse bid,” which units the ground value to purchase Genesis within the occasion of an public sale.
The non-public fairness agency has invested in Genesis earlier than, when it was on the verge of submitting for chapter for the second time in 2021, in keeping with courtroom paperwork. The operator had filed for Chapter 11 earlier than in 2000 and emerged from restructuring in 2001.
ReGen’s preliminary $50 million funding in 2021, paired with a lease restructuring settlement with Genesis’ largest landlord, allowed the operator to “narrowly” keep away from a chapter submitting, in keeping with courtroom paperwork. The non-public fairness agency continued to spend money on Genesis, and its funding totaled about $100 million.
Nevertheless, liabilities associated to previous expansions, “years of economic stress and deferred capital expenditures,” pressures from the COVID-19 pandemic and insufficient Medicaid reimbursement prompted Genesis to file for Chapter 11 protections once more on Wednesday.
“All informed, whereas ReGen’s cumulative funding of roughly $100 million (over roughly two years) allowed the Firm to keep away from chapter and supplied a liquidity runway to a enterprise battling legacy liabilities and different enterprise challenges, it was sadly inadequate to permit the Firm to completely rework its enterprise mannequin and obtain long-term viability,” Louis Robichaux IV, co-chief restructuring officer, wrote in courtroom paperwork Thursday.
In preliminary filings, Genesis mentioned it has as much as 25,000 collectors, with liabilities between $1 billion to $10 billion.
Genesis has confronted different monetary challenges prior to now, together with an almost $54 million nice in 2017 from the federal government to settle allegations it violated the False Claims Act for submitting “medically pointless remedy and hospice companies, and grossly substandard nursing care.”
Genesis joins a rising variety of notable bankruptcies this yr. In January, well being system Prospect Medical Holdings filed for Chapter 11 protections. Final yr, each medical heart operator CareMax and hospital operator Steward Well being Care filed for chapter.
Though healthcare bankruptcies declined in 2024, the sector nonetheless notched the second-highest variety of filings prior to now six years.
