Genesis HealthCare’s most recent move to shift toward a market-focused model has some in the industry wondering if the post-acute care company is attempting to follow in the footsteps of another major player in the skilled nursing space.
Late last week Kennett Square, Pa.-based Genesis announced the departures of their Chief Operating Officer Paul Bach, Chief Nursing Officer JoAnne Reifsnyder and Chief Financial Officer Tom DiVittorio. Genesis named new executives from both within the company and outside, including incoming COO Melissa Powell of The Allure Group.
This followed CEO Harry Wilson’s announcement earlier this month that he would be leaving the company on Nov. 15.
At the same time, Genesis announced its shift to a model “designed to build out a vertically integrated community-based health care system in every market, supported by centralized resources.”
Stifel analysts in a note issued on Monday said the move was “presumably taking a page out of [The] Ensign Group’s playbook.”
The Ensign Group (Nasdaq: ENSG) in its third quarter earnings call reported continued occupancy improvement and revenue increases throughout the quarter to both their skilled and managed care.
Ensign also indicated it would take an aggressive approach to the acquisition market moving forward following its formation of a captive real estate investment trust (REIT).
The company has returned all of the provider relief funds (PRF) it has received.
Sabra Health Care REIT Chief Investment Officer Talya Nevo-Hacohen told Skilled Nursing News that Ensign has set an example that some skilled nursing operators have attempted to replicate.
“Clearly Ensign has become somewhat of a role model for a lot of companies in the way they’ve been able to both scale up their operating model and continue to be very successful,” Nevo-Hacohen said.
“They’re unusual in that they’re a skilled nursing operator that has returned all of their PRF, so that’s quite remarkable and really sets them apart,” she added.
Sabra struck its first deal with Ensign on Oct. 1 that involved the transition of three skilled nursing facilities located in Idaho and Texas.
Nevo-Hacohen referred to the move by Genesis as “interesting” but “not surprising.” She said the decision could potentially be a good one for them, but it’s all in the execution.
Sabra has eight Genesis properties on its books, CEO Rick Matros said during Sabra’s third-quarter earnings call.
“Genesis is a company so much in transition in every way,” she said. “So it’s going to take solid leadership to get to a place that they’ve intimated that they want to get to.”
Back in March Genesis announced a three-part strategic restructuring plan as it “charts a path to recovery,” which included steps to reduce its debt by $256 million and an immediate $50 million capital investment.
Genesis saw $67 million in lost revenue associated with COVID-19 during the second quarter of 2020 and $74 million for the first six months of 2020. The company’s occupancy dropped from 88.2% from the first quarter to 77% in the second and went down to 74.8% by July.
Genesis voluntarily delisted from the New York Stock Exchange and entered into an agreement with ReGen Healthcare LLC for a capital infusion of $50 million — adding Chairman David Harrington to its board as part of the deal.
The company also sold 51 skilled nursing, assisted living and senior living facilities in nine states to new operators in exchange for $86 million that was used to repay a portion of its debt obligations to Welltower, along with $170 million in debt reduction from Welltower.
Companies featured in this article:
Ensign Group, Genesis HealthCare, ReGen Healthcare, Sabra Health Care REIT, Stifel, Welltower