Sabra Health Care is cutting ties with its largest skilled nursing operator and selling 36 facilities.
Chairman and CEO Rick Matros noted on an earnings call in November the many benefits of divesting its Senior Care Centers properties — among them, dropping Sabra’s exposure to skilled care in Texas, which has weak Medicaid reimbursement and excess skilled beds.
“The continued instability of management and inability to execute really validated the concerns we had earlier this year that we needed to do something about the Senior Care portfolio,” Matros said.
Sabra entered into a non-binding letter of intent to sell the 36 SNFs, along with two senior housing communities, at the end of August, it announced Nov. 5. It stands to earn an aggregate sale price of $405 million for the properties, now leased to Senior Care Centers. Closing of the sale, officials said, is subject to a due diligence period, with a target date of early 2019.
During the quarter ending Sept. 30, Senior Care defaulted on its leases and began operating on a month-to-month basis. Sabra said that it was operating under the assumption that it was unlikely it would receive rent pay from the leases to close out 2018, worth about $58.5 million total for the year.
Without those revenues, Sabra’s numbers have been tugged down a little, but Matros said he expects the company to stay on course to close out the calendar.
“This is something that we would have preferred to avoid and we expended a lot of effort to give Senior Care Centers and the board as many opportunities as possible to get to a different place,” he said.
“Despite best efforts, they weren’t able to do that, but this is a short-term issue. I’m not happy about it, but it doesn’t change anything we’ve said in terms of what we plan to do and where we’re going to be going into 2019.”
From the December 2018 Issue of McKnight's Long-Term Care News
