Better days are coming to both the nation’s largest skilled care chain and the sector overall, its CEO said Monday.
Genesis Healthcare ended 2018 with a more than $235 million in net losses. But that’s an improvement from the $579 million lost in 2017, leaders revealed Monday.
George Hager noted reason for optimism in 2019, with same-store occupancy growing for the first time since 2014, and same-store earnings also climbing 6.5% in the fourth quarter.
“Last year we strengthened Genesis by successfully restructuring leases and loans, divesting underperforming or non-strategic assets, reducing overhead costs and driving solid and consistent operating results while enhancing our clinical outcomes,” Hager noted. “We are excited to build on these accomplishments and our momentum in 2019.”
Hager added that the “the post-acute care industry has gone through revolutionary change,” toward a greater focus on delivering value and care coordination.
The Kennett Square, PA, company has been hampered by escalating rent obligations in recent years, and officials said they will continue to seek ways to relieve those pressures. When not accounting for those lease costs — along with interest, taxes, depreciation of assets and amortization — Genesis tallied $603.9 million in 2018 profits, compared to $632.4 million the previous year.
As a creative way to relieve escalating rent pressures, Genesis announced last month that it was buying back 15 facilities that it has been leasing from real estate investment trust Welltower. With the move, Genesis is partnering with investment firm Next Healthcare Capital and will hold a 46% ownership interest in the facilities. As part of the deal, 2% annual will be waved over the next five years.
Company officials said they will continue to seek out other such opportunities in the future, with property ownership a core strategy. Genesis currently owns the real estate for 11% of its facilities, with another 6% having fixed-price purchase options down the line.
