George Hager, CEO, Genesis HealthCare

Adverse effects from COVID-19 forced Genesis HealthCare to raise “substantial doubt” about its ability to operate in the near future. Genesis executives detailed their concerns during a second-quarter earnings call in mid-August.

They reported that lost revenue and higher expenses created a $213 million crater from March to the end of June. It also has received about $228 million in federal aid. 

“We’re very grateful for the federal and state financial support received thus far,” CEO George Hager said. “But as this pandemic continues, and in some areas it intensifies, additional and timely support is needed to continue funding the higher cost of labor and the significant precautions and protocols we have put in place to keep our patients, our residents and our employees safe.” 

Genesis added that, without taking into account future government funding and other mitigating plans, it’s unlikely the company will be able to “generate sufficient cash flows to meet its required financial obligations, including its rent obligations, its debt service obligations and other obligations due to third parties,” according to its second-quarter earnings release. 

“The existence of these conditions raises substantial doubt about the company’s ability to continue as a going concern for the twelve-month period following the date the financial statements are issued,” it wrote. 

Genesis’ occupancy levels declined from 88.3% to 77% from the first to the second quarters. Its operating occupancy in the month of July was 74.8% — an increase of 60 basis points from a month earlier.