Genesis HealthCare has signed a definitive agreement to sell 51% of its Chinese subsidiary, GRS-HS, to Riswein Health Industry Investment for $30 million.
The deal is expected to close in the first quarter of 2019, subject to regulatory and licensing approvals and other customary conditions.
GRS-HS will seek approval for a new, wholly owned foreign entity (WOFE) in China, a process expected to take about nine months to complete, according to a press release announcing the deal.
Riswein is expected to invest $30 million for the 51% stake upon formation of the WOFE, while GRS-HS will own the other 49%. The two companies will use the $30 million for additional expansion in China, the release said.
Riswein will lend GRS-HS $5 million in the interim to fund operating expenses during the WOFE approval process.
Genesis first announced its expansion into China in May 2015, and the company provides rehabilitation therapy services as GRS-HS to 12 facilities in Hong Kong, Guangzhou, Zhejiang, Shanghai, Beijing and Qinhuangdao.
“We have made significant headway introducing rehabilitation to China,” Genesis CEO George Hager said in the release. “We are excited to partner with Riswein, who with their local resources and expertise will help us take GRS-HS to the next level.”
The move comes as Genesis’ U.S. operations—and the skilled nursing industry at large—have been beset by challenges. Genesis has undertaken a series of financing and M&A transactions over the last year.
The Chinese market has been of interest to U.S. senior care providers for several years, given that there are expected to be about 330 million Chinese citizens over the age of 65 by 2050.
Written by Maggie Flynn
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