Over the last several years, regionalization has dominated the mergers-and-acquisitions narrative in nursing homes, with operators and investors increasingly questioning the utility of massive scale in a landscape that depends so heavily on local market factors such as Medicaid rates and hospital referral flows.

But as former giants such as Kindred Healthcare exited the industry or changed hands in pieces, Genesis HealthCare (NYSE: GEN) stood as one of the last remaining public monoliths in skilled nursing.

It certainly hadn’t been smooth sailing for Genesis prior to the pandemic, with real estate investment trust (REIT) landlord Sabra Healthcare REIT (Nasdaq: SBRA) largely ending its relationship with the provider in 2018 and a persistently low stock price generating two continued listing warnings from the New York Stock Exchange.

The company also embarked on a plan to concentrate its footprint, which had stood at more than 400 as recently as 2018, by exiting non-core markets and focusing on its traditional strongholds in the Northeast and Mid-Atlantic.

“I think local market density is critical to success,” former CEO George Hager said in 2018. “You can see as we move out west and to some degree in the south, we do not have the same level of market density… the right level of market density to really achieve, be effective and be competitive.”

Despite the challenges, the provider came into the pandemic with 357 skilled nursing facilities, according to a filing current as of December 31, 2019 — and, for better or for worse, increased public attention due to its unique position as one of the very few nursing home operators that released regular quarterly performance data.

Then COVID-19 dealt the knockout blow.

Citing ballooning expenses and revenue declines — driven in part, the company asserted, by its density in early COVID-19 hotspots along the East Coast — Genesis sent up a warning flare last August when it announced “substantial doubt” about its ability to continue as a going concern.

Restructuring felt inevitable as landlords wrote down the company’s rent and former CEO George Hager departed at the start of the year — and it finally came earlier this month when Genesis announced a plan to leave the NYSE and accept a $50 million investment from private firm ReGen Healthcare.

“The severity of the pandemic dramatically impacted patient admissions, revenues, and costs, compounding the pressures of our long-term, lease-related debt obligations,” CEO Robert Fish said. “These restructuring transactions improve the financial and operational stability of the company significantly and build on the encouraging signs we are seeing as COVID-19 case rates continue to materially decline and residents, patients, and staff are vaccinated.”

The news came a day after REIT landlord Welltower Inc. (NYSE: WELL) announced that it would largely break up with Genesis, transferring operations of 51 buildings to new operators.

“Today’s transactions represent the culmination of Welltower’s 10-year operating partnership with Genesis,” Welltower CFO Tim McHugh said in a statement. “We are pleased to have attained a mutually beneficial resolution for both companies, having generated substantial proceeds to Welltower while simultaneously de-risking the company.”

It was also the culmination of several long-simmering trends in nursing home operations and investment.

“You’re seeing a further bifurcation between the winners and losers that’s been going on for the past decade,” Michael Carroll, a director at RBC Capital Markets who covers Welltower, told SNN. “The winners are going to continue to take share.”

In Carroll’s view, Welltower’s move to uncouple itself from Genesis marks another milepost on REITs’ evolving view of the skilled nursing landscape.

“They want to partner with strong, regional players that know how to create partnerships with those health systems in that area — and obviously the Medicaid programs are all different,” Carroll said.

Richard Anderson, managing director and senior REIT analyst at SMBC Nikko Securities America, agreed.

“There’s no doubt that regional players in skilled nursing have performed better,” Anderson said. “You don’t have a whole lot to compare it to, with Genesis and Ensign, but as a look-back over difficult patches in time, you can make a fairly reasonable statement that regional operators have just done better. They’re more intertwined into their local communities.”

Anderson pointed to the industry disruption that came in the wake of the shift to the prospective payment system (PPS) for Medicare reimbursements in the late 1990s.

“Essentially not a single regional operator went bankrupt, and a lot of the public ones did,” he said.

The Ensign Group (Nasdaq: ENSG) now sits as the last major public nursing home operator left standing between the Nasdaq and the NYSE; National HealthCare Corporation trades on the NYSE American exchange, while shares of Diversicare Healthcare Services trade over the counter.

Companies such as Brookdale Senior Living (NYSE: BKD) and Five Star Senior Living (NYSE: FVE) do offer skilled nursing services, but primarily operate less-regulated assisted and independent living campuses.

Ensign additionally occupies a unique space between national and local. The San Juan Capistrano, Calif.-based operator boasts a 232-building footprint, concentrated mostly in the West, and a decentralized operational strategy that puts control firmly in the hands of its regional leaders — with the corporate team serving largely as an administrative backbone.

“Think about it as a franchise model, almost,” Ensign CEO Barry Port told SNN back in 2019. “They adapt their own best practices based on their local health care market, and they grow and expand as smaller functional units and affiliates — they’re not tied to any puppet strings here.”

That focus on local markets fits into what Carroll described as a key advantage for any operator-REIT relationship: a deep knowledge of reimbursement trends, particularly a sense of where the changes are headed into the future, as well as a laser focus on providing better outcomes.

The end of Genesis’s tenure as a public company comes at a crucial time for the long-term care sector, which endured the worst year in its history and faces loud calls for reform from resident advocates, families, lawmakers, and many from within the industry itself.

Sen. Elizabeth Warren in particular focused on a controversial $5.2 million retention bonus paid to Hager during a lengthy Senate Finance Committee hearing on COVID-19 in nursing homes last week; the Massachusetts Democrat has also vowed to launch an investigation into for-profit nursing homes and private equity investment in the sector.

But prior to the hearing, a general consensus had emerged among investors and industry-watchers that the federal government’s support of facilities throughout the pandemic — via CARES Act cash and other relief programs — indicated that some kind of future was secure for SNF operators. It’s just a matter of how it will evolve with increased scrutiny and new operational dynamics.

“By no means is the skilled nursing business dead. It’s very much alive, and quite heroic through all of the pandemic,” Anderson said. “In the near-term, do I think regional players will play a more important role? I do, and I think that will be the name of the game for the time being.”

Still, he stopped short of closing the door completely on a resurgence of large, public nursing home chains.

“Is it the end of the publicly traded national brand? That’s hard to say,” Anderson said. “Ensign is a well-run company, and to make a blanket statement is probably before its time at the moment. It puts to an end, at least for now, Genesis as we know it.”