Genesis Healthcare warns of bankruptcy after operating challenges in Q3

Kennett Square, Pa.-based Genesis Healthcare, one of the largest nursing home operators in the nation, warned Nov. 8 that it may have to file for bankruptcy protection without support from creditors, according to The Philadelphia Inquirer.

"As currently structured, it is unlikely that the company will be able to generate sufficient cash flow to cover required financial obligations, including its rent obligations, its debt-service obligations and other obligations due to third parties," Genesis Healthcare wrote in its quarterly report to the Securities and Exchange Commission, according to the Inquirer.

In the third quarter ended Sept. 30 Genesis had a net loss of $615 million on revenue of $1.3 billion. In the same quarter of fiscal year 2016, Genesis saw a net loss of $52 million on revenue of $1.4 billion.

Genesis blamed the financial woes on recent healthcare reforms that decreased patient admissions, shortened patients' length of stay and increased compensation requirements. In addition, Genesis added that there was a significant increased cost of capital as the lease payments accelerated in the third quarter of 2017.

The financial troubles caused the company to take a $360 million write down for the goodwill — the future economic benefits from an acquisition beyond physical assets — associated with its inpatient operations. 

More articles on post-acute care:
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