George Hager Jr., CEO of Kennett Square-based Genesis HealthCare, believes that his company’s latest financial restructuring is a huge step toward its recovery and transition into the next phase of the nursing home industry, writes Harold Brubaker for the Philadelphia Inquirer.
In the deal announced last week, Genesis’s largest landlords – Welltower and Sabra Health Care REIT – agreed to sell several properties currently leased to Genesis, which will then lease back the properties from their new owners at a lower price. This reduction in rent is expected to save the company approximately $54 million a year.
Debt restructuring, a pause in cash payments on certain debt, is expected to bring the total restructuring relief between $80 million to $100 million annually.
During a recent investor call, Dana Hambly, an analyst at Stephens, congratulated Hager on the restructuring, but expressed doubt about the longevity of the deal.
“It’s a huge relief, but I fear if the underlying operations don’t start to stabilize and improve, we’ll be at this same point in another year from now or so,” said Hambly.