Genesis HealthCare Faces Stock Delisting Warning Amid Financial Pressures

Genesis HealthCare (NYSE: GEN) this week received a delisting warning from the New York Stock Exchange, giving the skilled nursing provider six months to see improvements in its stock price.

The Kennett Square, Pa.-based company’s stock averaged less than $1 per share over a recent 30-day trading period, a violation of the NYSE’s continued listing standards.

Under the exchange’s rules, Genesis will now enter a six-month “cure period,” during which the company can regain its standing by finishing any single month with an average stock price of at least $1; the stock must also close at at least a dollar on the final day of the month in question.


“Reimbursement and occupancy challenges facing our entire industry have negatively impacted the Genesis HealthCare stock price and those of other providers in the industry,” CEO George Hager said in a statement.

The news comes less than a month after the provider announced a major restructuring plan that will see Genesis landlords Welltower, Inc. (NYSE: HCN) and Sabra Health Care REIT (Nasdaq: SBRA) sell off properties to owners who will offer lower rents. Genesis insisted the NYSE delisting warning will not affect those plans.

“We recently announced plans to restructure master leases and loans which, if fully consummated, we believe will result in a significantly strengthened capital structure for the company and play a key role in long-term shareholder value,” Hager said in the statement. “We are confident in our ability to address the listing standard deficiency.”


The company also indicated that it will explore other options, in addition to the existing restructuring plan, to help bring its stock back into compliance.

The NYSE additionally requires companies to maintain a market capitalization of at least $50 million to remain on the exchange; Genesis noted that its current market cap is more than double that threshold.

“Down cycle”

The skilled nursing landscape is in the midst of “the most protracted and complex down cycle in our history,” Hager said on the company’s most recent earnings call, which saw Genesis post a GAAP net loss of $378.8 million.

Hager blamed declines in census, fewer reimbursement dollars from Medicare and Medicaid, and rising nurse wages, though he remained optimistic about the future of the industry — citing its necessity to the overall health care landscape.

“The service we provide is, and will continue to be, an essential component of the health care delivery system,” Hager said on the call.

GEN stock closed Thursday’s trading at $0.69 per share. While the stock will continue to trade on the NYSE, it will appear as “GEN.BC” to indicate “below compliance.”

Written by Alex Spanko

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