Genesis Healthcare appears to be correcting its long-time slide in the nursing home sector, confirming this week that the company is adding 34 skilled nursing facilities in Pennsylvania and four in Colorado.
All of the buildings were operated by former competitor ProMedica under agreement with real estate investment trust Welltower until late last year, but ProMedica surrendered its stake in those skilled nursing facilities as it struggled to recover from $105 million in losses in its senior care division.
Welltower exited its own substantial relationship with Genesis just three years ago. At one time, Genesis represented more than 17% of Welltower’s pro rata net operating income. But the operator struggled financially during the early pandemic and had reduced its facility presence nationwide since 2015.
In March 2021, at the time of the Welltower divestiture, Genesis came under the control of ReGen Healthcare LLC, a private-equity-backed firm based in New York. It financed a turnaround with an initial $50 million in debt. ReGen is affiliated with Pinta Capital Partners, a private equity firm founded by Allure Group owner Joel Landau.
After the changes, Genesis was no longer a publicly traded firm.
But under ReGen and with the installment of new corporate leaders and the adoption of a local leadership approach, Genesis has begun to grow again.
“This transition marks the largest expansion of services provided by Genesis and its affiliates since the organization underwent a transformation into a market model approach in the delivery of patient care,” Chief Operating Officer Melissa Powell (pictured) told the McKnight’s Business Daily on Tuesday.
ProMedica exit paves way
Welltower announced in November that it would transition 147 skilled nursing facilities operated by ProMedica, also based in Toledo, into a joint venture between Welltower and Integra Health.
The deal for Genesis to take over 38 facilities brings the long-time operator back into the REIT’s good graces. Welltower already owns most of Genesis’ real estate, which it bought for $2.4 billion in 2011. The chain’s business relationships were outlined by the Philadelphia Inquirer Tuesday. The newspaper reported Genesis, once a mainstay in Pennsylvania and New Jersey, had dropped to just 15 facilities in Pennsylvania before this week’s announcement.
Welltower’s leaders have said the move was expected to strengthen the relationship between Genesis and Welltower. On Tuesday, Powell said Genesis was also looking to strengthen its relationships with building leaders and teams already on the ground.
“The national services team of Genesis looks forward to supporting and empowering facility leaders as they continue to focus on meeting the needs of local communities and achieving the best possible outcomes for patients and residents,” Powell said. “We already have a strong market presence in Pennsylvania and Colorado, and we are confident that these facilities will strengthen the services these markets provide.”