ProMedica Reports $101M Loss, Staffing ‘Dramatically Increasing’ Costs

As federal stimulus payments slow at this point in the pandemic, ProMedica reported a $101.4 million operating loss for the first nine months of the year — with a $23.5 million loss for the third financial quarter alone.

During the first nine months of 2020, the Toledo, Ohio-based operator said it had $168 million in operating income, benefitting from $257.5 million in CARES Act funding; ProMedica recorded its federal stimulus payments as other revenue.

“While Provider division volumes have returned to normal levels, industry-wide COVID-related admission volume declines continued to adversely impact the Senior Care division,” ProMedica said in its quarterly disclosure. “ProMedica recorded $55.5 million of CARES Act and other government stimulus income in other revenue during the first nine months of 2021, but it was insufficient to offset $106 million of COVID-19 related costs.”

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In an email to Skilled Nursing News, a ProMedica spokesperson added that difficulty attracting staff is “dramatically increasing our costs,” while reducing occupancy, further contributing to its reported operating loss.

Skilled nursing occupancy decreased from 75% in 2020 to 70% this year during nine-month time periods — between 2019 and 2020, occupancy dropped from 85% to 73%, ProMedica said in its quarterly disclosure.

ProMedica currently operates 157 skilled nursing facilities — its footprint in the SNF space declined this year with the divestiture of a SNF portfolio owned by real estate investment trust (REIT) Welltower Inc. (NYSE: WELL) announced in the first quarter.

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Welltower and ProMedica in March bolstered its 80-20 joint venture, respectively, after Promedica acquired HCR ManorCare’s operations in 2018.

Nineteen sales have closed already, with four more expected to close between the fourth quarter this year and first quarter of 2022. Overall, ProMedica’s skilled nursing facilities decreased from 168 as of Sept. 30, 2020.

While ProMedica will receive a “portion” of sale proceeds through the joint venture and rent reduction in exchange for the transfer of operating rights, the divestiture generated $29 million in operating losses for the first nine months of the year, ProMedica noted.

In addition to divestitures reported for the first quarter, ProMedica mentioned its purchase of nine former PowerBack Rehabilitation properties, also through the Welltower joint venture. The move was part of a larger uncoupling between Welltower and Genesis, after Genesis announced in March it would voluntarily remove itself from the New York Stock Exchange amid restructuring efforts.

“ProMedica also purchased a 20% interest in the joint venture entity that owns the real estate,” the operator said of the second quarter acquisition. “The terms of the new joint venture agreement are substantially the same as ProMedica’s existing joint venture agreement with Welltower, and the existing Master Lease with Welltower was amended to include the nine new properties effective April 1.”

ProMedica is currently managing all nine properties; operating and licensure transfers are pending final regulatory approvals at some locations.

Other partnerships continue to offset a declining SNF portfolio number, including an initiative announced in August to design and build two skilled nursing facilities in the metro Atlanta area with Emory Healthcare.

The company experienced a shift in leadership this summer, with Angela Brandt taking on the role of CEO in July, less than a year after ProMedica announced it would rebrand HCR ManorCare under the “ProMedica Senior Care” banner.

ProMedica operates a health plan, physician group, 11 hospitals and 330 senior care locations, including skilled nursing and rehabilitation centers, hospice, home health and assisted living as of Sept. 30.

Senior care makes up 40% of ProMedica’s operating revenue year-to-date, followed by 30% from its providers and insurance arm, Paramount.

Total operating revenue was $1.74 billion for the third quarter, the operator added in its unaudited quarterly disclosure, an increase of $120.9 million or 7.5% from the prior year.

Its $5.11 billion in total operating revenue for the first nine months of the year was “comparable” with the prior year, ProMedica said, despite reduced stimulus relief funding. 

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