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One of the region’s largest rehab, skilled nursing home and independent senior living chains declared bankruptcy this week as it attempts to restructure its debt and emerge as a “stronger, healthier company.”
Genesis HealthCare, headquartered in Kennett Square, is the parent company of about 175 centers across 18 states, including Delaware, New Jersey and Pennsylvania.
The health care operator filed for Chapter 11 bankruptcy protection Wednesday in the Northern District of Texas, listing more than $1.5 million in unsecured debt to creditors in missed rental payments, pension fund contributions and other unpaid, rendered services.
One of those creditors is the Commonwealth of Pennsylvania, which is owed $58 million in nursing facility assessment fees, according to court documents.
Lauren Murray, Genesis HealthCare’s chief operating officer, told WHYY News that “we don’t expect any impact to resident care or staffing.”
The chain has secured a $30 million loan and has other cash on hand to continue to cover employee payroll and benefits.
“We believe this financial reorganization is a necessary step for our organization to sustainably deliver on our mission of improving lives through delivery of high-quality health care and everyday compassion,” Murray said in an earlier press release.
The company that would one day become Genesis HealthCare was founded four decades ago this year. By 2015, it became one of the largest post-acute care providers in the country with more than 500 skilled nursing centers across 34 states, according to its website.
But as the health care chain quickly expanded, it also faced more complicated industry regulations and requirements and fewer profits, investors and owners said in court documents. Those hurdles were then compounded by challenges during the COVID-19 pandemic.
“The after-effects of the pandemic on the skilled nursing industry generally, and Genesis HealthCare specifically, cannot be overstated,” Louis E. Robichaux IV, Genesis HealthCare co-chief restructuring officer, stated in court filings.
Private equity firm ReGen Healthcare, LLC has invested more than $100 million in the company, but Robichaux said it has not been enough to overcome the debt, which has been exacerbated by “insufficient state Medicaid reimbursement rates.”
“In particular, insufficient reimbursement rates in the Commonwealth of Pennsylvania and the State of New Jersey have been a notable contributor to the debtors’ financial struggles,” Robichaux stated.
The company employs about 27,000 workers nationally and provides short- and long-term residential beds for about 15,000 people, according to court documents.
Bankruptcy hearings are scheduled for dates in August and September before U.S. District Court Judge Stacey G. Jernigan.
“Our ongoing work has confirmed that, to maintain our momentum, we must address our legacy debt structure,” said David Harrington, executive chairman of the Genesis HealthCare Board of Directors, in a press release. “The goal of this filing is to emerge a stronger, healthier company poised to exceed our goals for clinical and operational excellence.”
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