Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 07, 2017 | |
Document and Entity Information [Line Items] | ||
Entity Registrant Name | Genesis Healthcare, Inc. | |
Entity Central Index Key | 1,351,051 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Current Reporting Status | Yes | |
Class A Common Stock | ||
Document and Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 94,100,738 | |
Class B Common Stock | ||
Document and Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 744,396 | |
Class C Common Stock | ||
Document and Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 61,561,393 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 50,591 | $ 51,408 |
Restricted cash and investments in marketable securities | 43,965 | 43,555 |
Accounts receivable, net of allowances for doubtful accounts of $267,321 and $218,383 at September 30, 2017 and December 31, 2016, respectively | 774,052 | 832,109 |
Prepaid expenses | 83,878 | 64,218 |
Other current assets | 46,306 | 63,641 |
Assets held for sale, current | 4,056 | |
Total current assets | 998,792 | 1,058,987 |
Property and equipment, net of accumulated depreciation of $881,049 and $807,776 at September 30, 2017 and December 31, 2016, respectively | 3,470,946 | 3,765,393 |
Restricted cash and investments in marketable securities | 96,411 | 112,471 |
Other long-term assets | 122,144 | 137,602 |
Deferred income taxes | 5,754 | 6,107 |
Identifiable intangible assets, net of accumulated amortization of $84,073 and $91,155 at September 30, 2017 and December 31, 2016, respectively | 147,239 | 175,566 |
Goodwill | 85,642 | 440,712 |
Assets held for sale, noncurrent | 82,363 | |
Total assets | 4,926,928 | 5,779,201 |
Current liabilities: | ||
Current installments of long-term debt | 851,344 | 24,594 |
Capital lease obligation | 949,050 | 1,886 |
Financing obligations | 2,908,020 | 1,613 |
Accounts payable | 241,145 | 258,616 |
Accrued expenses | 220,376 | 215,457 |
Accrued compensation | 163,727 | 181,841 |
Self-insurance reserves | 168,933 | 172,565 |
Current portion of liabilities held for sale | 988 | |
Total current liabilities | 5,502,595 | 857,560 |
Long-term liabilities: | ||
Long-term debt | 284,014 | 1,146,550 |
Capital lease obligations | 45,974 | 997,340 |
Financing obligations | 8,711 | 2,867,534 |
Deferred income taxes | 25,725 | 22,354 |
Self-insurance reserves | 454,774 | 445,559 |
Liabilities held for sale | 69,057 | |
Other long-term liabilities | 133,854 | 103,435 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Additional paid-in-capital | 296,378 | 305,358 |
Accumulated deficit | (1,285,356) | (795,615) |
Accumulated other comprehensive loss | (134) | (221) |
Total stockholders’ deficit before noncontrolling interests | (988,956) | (490,323) |
Noncontrolling interests | (539,763) | (239,865) |
Total stockholders' deficit | (1,528,719) | (730,188) |
Total liabilities and stockholders’ deficit | 4,926,928 | 5,779,201 |
Class A Common Stock | ||
Stockholders’ equity: | ||
Common stock | 94 | 75 |
Class B Common Stock | ||
Stockholders’ equity: | ||
Common stock | 1 | 16 |
Class C Common Stock | ||
Stockholders’ equity: | ||
Common stock | $ 61 | $ 64 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Allowance for doubtful accounts | $ 267,321 | $ 218,383 |
Other assets: | ||
Accumulated depreciation on property and equipment | 881,049 | 807,776 |
Accumulated amortization on intangible assets | $ 84,073 | $ 91,155 |
Class A Common Stock | ||
Stockholders’ equity: | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, issued (in shares) | 93,976,674 | 75,187,388 |
Common stock, shares, outstanding (in shares) | 93,976,674 | 75,187,388 |
Class B Common Stock | ||
Stockholders’ equity: | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, issued (in shares) | 744,396 | 15,495,019 |
Common stock, shares, outstanding (in shares) | 744,396 | 15,495,019 |
Class C Common Stock | ||
Stockholders’ equity: | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, issued (in shares) | 61,600,511 | 63,849,380 |
Common stock, shares, outstanding (in shares) | 61,600,511 | 63,849,380 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||
Net revenues | $ 1,315,452 | $ 1,418,994 | $ 4,045,860 | $ 4,329,570 |
Salaries, wages and benefits | 739,404 | 834,414 | 2,303,300 | 2,534,824 |
Other operating expenses | 375,587 | 350,828 | 1,090,139 | 1,062,086 |
General and administrative costs | 40,732 | 46,545 | 127,041 | 139,999 |
Provision for losses on accounts receivable | 25,187 | 25,602 | 72,700 | 81,776 |
Lease expense | 38,670 | 35,512 | 113,004 | 109,796 |
Depreciation and amortization expense | 59,390 | 61,104 | 183,986 | 190,822 |
Interest expense | 124,431 | 131,812 | 373,473 | 400,853 |
Loss on early extinguishment of debt | 15,363 | 2,301 | 15,830 | |
Investment income | (1,596) | (934) | (4,097) | (2,073) |
Other loss (income) | 2,379 | (5,173) | 15,602 | (48,084) |
Transaction costs | 1,056 | 3,057 | 7,862 | 9,804 |
Customer receivership | 297 | 35,864 | ||
Long-lived asset impairments | 163,364 | 163,364 | ||
Goodwill and identifiable intangible asset impairments | 360,046 | 360,046 | ||
Skilled Healthcare and other loss contingency expense | 15,192 | |||
Equity in net income of unconsolidated affiliates | (69) | (893) | (291) | (2,153) |
Loss before income tax expense (benefit) | (613,426) | (78,243) | (798,434) | (179,102) |
Income tax expense (benefit) | 1,596 | (25,888) | 5,683 | (19,738) |
Loss from continuing operations | (615,022) | (52,355) | (804,117) | (159,364) |
Loss from discontinued operations, net of taxes | (2) | (24) | (70) | (1) |
Net loss | (615,024) | (52,379) | (804,187) | (159,365) |
Less net loss attributable to noncontrolling interests | 241,200 | 31,921 | 314,446 | 72,895 |
Net loss attributable to Genesis Healthcare, Inc | $ (373,824) | $ (20,458) | $ (489,741) | $ (86,470) |
Basic and diluted: | ||||
Weighted-average shares outstanding for basic and diluted net loss per share | 94,940 | 90,226 | 93,376 | 89,617 |
Basic and diluted net loss per common share: | ||||
Loss from continuing operations attributable to Genesis Healthcare, Inc. | $ (3.94) | $ (0.23) | $ (5.24) | $ (0.96) |
Loss from discontinued operations, net of taxes | 0 | 0 | 0 | 0 |
Net loss attributable to Genesis Healthcare, Inc. | $ (3.94) | $ (0.23) | $ (5.24) | $ (0.96) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net loss | $ (615,024) | $ (52,379) | $ (804,187) | $ (159,365) |
Net unrealized gain (loss) on marketable securities, net of tax | 134 | (298) | 160 | 730 |
Comprehensive loss | (614,890) | (52,677) | (804,027) | (158,635) |
Less: comprehensive loss attributable to noncontrolling interests | 241,147 | 31,921 | 314,373 | 72,464 |
Comprehensive loss attributable to Genesis Healthcare, Inc. | $ (373,743) | $ (20,756) | $ (489,654) | $ (86,171) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flows from Operating Activities | ||
Net loss | $ (804,187) | $ (159,365) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Non-cash interest and leasing arrangements, net | 51,049 | 70,228 |
Other non-cash charges, net | 15,602 | (48,084) |
Share based compensation | 7,206 | 6,759 |
Depreciation and amortization | 183,986 | 190,822 |
Provision for losses on accounts receivable | 72,700 | 81,776 |
Equity in net income of unconsolidated affiliates | (291) | (2,153) |
Provision for deferred taxes | 3,658 | (21,957) |
Customer receivership | 35,864 | |
Long-lived asset impairments | 163,364 | |
Goodwill and identifiable intangible asset impairments | 360,046 | |
Loss on early extinguishment of debt | 2,301 | 12,714 |
Changes in assets and liabilities: | ||
Accounts receivable | (52,572) | (136,383) |
Accounts payable and other accrued expenses and other | 28,632 | 40,945 |
Net cash provided by operating activities | 67,358 | 35,302 |
Cash Flows from Investing Activities | ||
Capital expenditures | (48,465) | (70,790) |
Purchases of marketable securities | (22,671) | (38,845) |
Proceeds on maturity or sale of marketable securities | 46,210 | 53,014 |
Net change in restricted cash and equivalents | (4,497) | 20,984 |
Purchases of inpatient assets, net of cash acquired | (108,299) | |
Sales of assets | 79,307 | 149,398 |
Other, net | (484) | (4,500) |
Net cash provided by investing activities | 49,400 | 962 |
Cash Flows from Financing Activities | ||
Borrowings under revolving credit facility | 478,000 | 662,000 |
Repayments under revolving credit facility | (509,650) | (611,000) |
Proceeds from issuance of long-term debt | 23,872 | 354,137 |
Proceeds from tenant improvement draws under lease arrangements | 6,083 | 1,157 |
Repayment of long-term debt | (109,798) | (436,923) |
Debt issuance costs | (4,402) | (12,441) |
Distributions to noncontrolling interests and stockholders | (1,680) | (897) |
Net cash used in financing activities | (117,575) | (43,967) |
Net decrease in cash and cash equivalents | (817) | (7,703) |
Cash and cash equivalents: | ||
Beginning of period | 51,408 | 61,543 |
End of period | 50,591 | 53,840 |
Supplemental disclosure of cash flow information | ||
Interest paid | 325,229 | 333,509 |
Net taxes refunded | (1,810) | (9,777) |
Non-cash investing and financing activities: | ||
Capital leases | (14,909) | (49,622) |
Financing obligations | $ 18,279 | $ 28,933 |
General Information
General Information | 9 Months Ended |
Sep. 30, 2017 | |
General Information | |
Description of Business | (1) General Informatio Company History Genesis Healthcare, Inc., a Delaware corporation, was incorporated in October 2005 under the name of SHG Holding Solutions, Inc., and subsequently changed its name to Skilled Healthcare Group, Inc. (Skilled). On February 2, 2015, Skilled combined its businesses and operations (the Combination) with FC-GEN Operations Investment, LLC, a Delaware limited liability company (FC-GEN), pursuant to a Purchase and Contribution Agreement dated August 18, 2014. In connection with the Combination, Skilled changed its name to Genesis Healthcare, Inc. Effective December 1, 2012, FC-GEN completed the acquisition of Sun Healthcare Group, Inc. (Sun Healthcare) and its subsidiaries. Description of Business Genesis Healthcare, Inc. is a healthcare services company that through its subsidiaries (collectively, the Company or Genesis) owns and operates skilled nursing facilities, assisted/senior living facilities and a rehabilitation therapy business. The Company has an administrative services company that provides a full complement of administrative and consultative services that allows its affiliated operators and third-party operators with whom the Company contracts to better focus on delivery of healthcare services. At September 30, 2017, the Company provides inpatient services through 472 skilled nursing, assisted/senior living and behavioral health centers located in 30 states. Revenues of the Company’s owned, leased and otherwise consolidated inpatient businesses constitute approximately 86% of its revenues. The Company provides a range of rehabilitation therapy services, including speech pathology, physical therapy, occupational therapy and respiratory therapy. These services are provided by rehabilitation therapists and assistants employed or contracted at substantially all of the centers operated by the Company, as well as by contract to healthcare facilities operated by others. Recently the Company has expanded its delivery model for providing rehabilitation services to community-based and at-home settings, as well as internationally in China. After the elimination of intercompany revenues, the rehabilitation therapy services business constitutes approximately 11% of the Company’s revenues. The Company provides an array of other specialty medical services, including management services, physician services, staffing services, and other healthcare related services, which comprise the balance of the Company’s revenues. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). In the opinion of management, the consolidated financial statements include all necessary adjustments for a fair presentation of the financial position and results of operations for the periods presented. The consolidated financial statements of the Company include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation. The Company presents noncontrolling interests within the stockholders’ deficit section of its consolidated balance sheets. The Company presents the amount of net loss attributable to Genesis Healthcare, Inc. and net loss attributable to noncontrolling interests in its consolidated statements of operations. The consolidated financial statements include the accounts of all entities controlled by the Company through its ownership of a majority voting interest and the accounts of any variable interest entities (VIEs) where the Company is subject to a majority of the risk of loss from the VIE's activities, or entitled to receive a majority of the entity's residual returns, or both. The Company assesses the requirements related to the consolidation of VIEs, including a qualitative assessment of power and economics that considers which entity has the power to direct the activities that “most significantly impact” the VIE's economic performance and has the obligation to absorb losses of, or the right to receive benefits that could be potentially significant to, the VIE. The Company's composition of variable interest entities was not material at September 30, 2017. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q of Regulation S-X and do not include all of the disclosures normally required by U.S. GAAP or those normally required in annual reports on Form 10-K. Accordingly, these financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2016 filed with the U.S. Securities and Exchange Commission (the SEC) on Form 10-K on March 6, 2017. Certain prior year disclosure amounts have been reclassified to conform to current period presentation. Going Concern Considerations The accompanying unaudited financial statements have been prepared on the basis the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In evaluating the Company’s ability to continue as a going concern, management considered the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern for 12 months following the date the Company’s financial statements were issued (November 8, 2017). Management considered the recent results of operations as well as the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows and the Company’s conditional and unconditional obligations due before November 8, 2018. The Company’s results of operations have been negatively impacted by the persistent pressure of healthcare reforms enacted in recent years. This challenging operating environment has been most acute in the Company’s inpatient segment, but also has had a detrimental effect on the Company’s rehabilitation therapy segment and its customers. In recent years, the Company has implemented a number of cost mitigation strategies to offset the negative financial implications of this challenging operating environment. These strategies have been successful in recent years, however, the negative impact of continued reductions in skilled patient admissions, shortening lengths of stay, escalating wage inflation and professional liability losses, combined with the increased cost of capital through escalating lease payments accelerated in the third quarter of 2017. These factors caused the Company to be unable to comply with certain financial covenants at September 30, 2017 under the Revolving Credit Facilities, the Term Loans, the Welltower Bridge Loans and the Master Lease Agreements and other agreements. The Company has received waivers from the parties to the Term Loans, the Welltower Bridge Loans and the Master Lease Agreements at September 30, 2017. The Company is engaged in discussions with its counterparties to the Revolving Credit Facilities to secure a 90-day forbearance agreement through late January 2018. The Company’s ability to service its financial obligations, in addition to its ability to comply with the financial and restrictive covenants contained in the major agreements and other agreements, is dependent upon, among other things, its ability to attain a sustainable capital structure and its future performance which is subject to financial, economic, competitive, regulatory and other factors. Many of these factors are beyond the Company’s control. 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. The Company and its counterparties to the Restructuring Plans, as defined in Note 16 – “ Subsequent Events – Restructuring Plans ,” have entered into these preliminary and non-binding agreements in an effort to attain a sustainable capital structure for the Company. The Company believes that it is in the best interest of all creditors to grant necessary waivers or reach negotiated settlements to enable the Company to continue as a going concern while it works with its counterparties to the Restructuring Plans to strengthen significantly its capital structure. However, there can be no assurance that timely and adequate waivers will be received in future periods or such settlements reached. If future defaults are not cured within applicable cure periods, if any, and if waivers or other forms of relief are not timely obtained, the defaults can cause acceleration of the Company’s financial obligations under certain of its agreements, which the Company may not be in a position to satisfy. Accordingly, the Company has classified the obligations of the effected agreements as current liabilities in its consolidated balance sheets as of September 30, 2017. In the event of a failure to obtain necessary and timely waivers or otherwise achieve the fixed charge reductions contained in the Restructuring Plans, the Company may be forced to seek reorganization under the U.S. Bankruptcy Code. See Part II. Item 1A, “ Risk Factors .” The existence of these factors raises substantial doubt about the Company’s ability to continue as a going concern. Recently Adopted Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (the FASB) issued Accounting Standards Update (ASU) No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09), which is intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The Company adopted ASU 2016-09 effective January 1, 2017. Its adoption had no material impact on the Company’s consolidated financial condition and results of operations. In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (350): Simplifying the Test for Goodwill Impairment (ASU 2017-04), which serves to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The adoption of ASU 2017-04 is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted ASU 2017-04 when it performed its annual goodwill impairment test at September 30, 2017 . The adoption of ASU 2017-04 eliminated Step 2 of the goodwill impairment test. See Note 15 – “Asset Impairment Charges.” Recently Issued Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), which serves to supersede most existing revenue recognition guidance, including guidance specific to the healthcare industry. The FASB later issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606) – Principal versus Agent Considerations , in March 2016, ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing , in April 2016, ASU 2016-12, Revenue from Contracts with Customers (Topic 606) – Narrow-Scope Improvements and Practical Expedients , in May 2016, and ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers , in December 2016, all of which further clarified aspects of Topic 606. The standard provides a principles-based framework for recognizing revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and requires enhanced disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The ASU will be effective for annual and interim reporting periods beginning after December 15, 2017. The standard may be applied retrospectively to each period presented (full retrospective method) or retrospectively with the cumulative effect recognized in beginning retained earnings as of the date of adoption (modified retrospective method). The Company will adopt the requirements of this standard effective January 1, 2018 using the modified retrospective method. A cross-functional implementation team has been established consisting of representatives from all of our operating segments. The implementation team is working to analyze the impact of the standard on the Company’s contract portfolio by reviewing current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to revenue contracts. In addition, the Company is in the process of identifying and implementing the appropriate changes to business processes and controls to support recognition and disclosure under the new standard. The Company expects to apply the portfolio approach practical expedient and is in the process of reviewing its revenue sources and evaluating the appropriate distribution of patient accounts into portfolios with similar collection experience that, when evaluated for collectibility, will result in a materially consistent revenue amount for such portfolios as if each patient account was evaluated on an individual contract basis. The Company is also evaluating the existence of variable consideration in the form of various reimbursement programs, such as bundled payment initiatives, which could have an impact on the revenue recognized. The Company expects that the adoption of the new standard will impact amounts presented in certain categories on its consolidated statements of operations, as upon adoption, certain amounts currently classified as bad debt expense may be reflected as implicit price concessions, and therefore an adjustment to net revenues. The Company is still evaluating the impact of the standard on its consolidated financial position, results of operations and cash flows. The Company is actively monitoring various industry publications, which continue to evolve. As such, any conclusions reached in the final industry guidance that are inconsistent with the Company's current assessment could result in revisions to the Company's expectations regarding the new standard’s impact on its consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01), which is intended to improve the recognition and measurement of financial instruments. The new guidance requires equity investments be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values; eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value; and requires separate presentation of financial assets and financial liabilities by measurement category. The new guidance is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted under certain circumstances. The Company does not expect the adoption of ASU 2016-01 to have a material impact on its consolidated financial condition and results of operations. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02), which amended authoritative guidance on accounting for leases. The new provisions require that a lessee of operating leases recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The lease liability will be equal to the present value of lease payments, with the right-of-use asset based upon the lease liability. The classification criteria for distinguishing between finance (or capital) leases and operating leases are substantially similar to the previous lease guidance, but with no explicit bright lines. As such, operating leases will result in straight-line rent expense similar to current practice. For short term leases (term of 12 months or less), a lessee is permitted to make an accounting election not to recognize lease assets and lease liabilities, which would generally result in lease expense being recognized on a straight-line basis over the lease term. The guidance is effective for annual and interim periods beginning after December 15, 2018, and will require application of the new guidance at the beginning of the earliest comparable period presented. Early adoption is permitted. ASU 2016-02 must be adopted using a modified retrospective transition. The adoption of ASU 2016-02 is expected to have a material impact on the Company’s financial position. The Company is still evaluating the impact on its results of operations and does not expect the adoption of this standard to have an impact on liquidity. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15), which addresses how certain cash receipts and cash payments should be presented and classified in the statement of cash flows. The new guidance is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted. The adoption of ASU 2016-15 is not expected to have a material impact on the Company’s consolidated statements of cash flows. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (230): Restricted Cash (ASU 2016-18), which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The adoption of ASU 2016-18 is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted, including adoption in an interim period. The adoption of ASU 2016-18 is not expected to have a material impact on the Company’s consolidated statements of cash flows. In January 2017, the FASB issued ASU No. 2017-01, Business Combination (805): Clarifying the Definition of a Business (ASU 2017-01), which provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The adoption of ASU 2017-01 is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted in certain circumstances. The Company does not expect the adoption of ASU 2017-01 to have a material impact on its consolidated financial condition and results of operations. |
Certain Significant Risks and U
Certain Significant Risks and Uncertainties | 9 Months Ended |
Sep. 30, 2017 | |
Certain Significant Risks and Uncertainties | |
Certain Significant Risks and Uncertainties | (2) Certain Significant Risks and Uncertainties Revenue Sources The Company receives revenues from Medicare, Medicaid, private insurance, self-pay residents, other third-party payors and long-term care facilities that utilize its rehabilitation therapy and other services. The Company’s inpatient services segment derives approximately 79% of its revenue from Medicare and various state Medicaid programs. The following table depicts the Company’s inpatient services segment revenue by source for the three and nine months ended September 30, 2017 and 2016. Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Medicare 22 % 24 % 23 % 25 % Medicaid 57 % 55 % 56 % 54 % Insurance 12 % 11 % 12 % 11 % Private and other 9 % 10 % 9 % 10 % Total 100 % 100 % 100 % 100 % The sources and amounts of the Company’s revenues are determined by a number of factors, including licensed bed capacity and occupancy rates of inpatient facilities, the mix of patients and the rates of reimbursement among payors. Likewise, payment for ancillary medical services, including services provided by the Company’s rehabilitation therapy services business, varies based upon the type of payor and payment methodologies. Changes in the case mix of the patients as well as payor mix among Medicare, Medicaid and private pay can significantly affect the Company’s profitability. It is not possible to quantify fully the effect of legislative changes, the interpretation or administration of such legislation or other governmental initiatives on the Company’s business and the business of the customers served by the Company’s rehabilitation therapy business. The potential impact of reforms to the United States healthcare system, including potential material changes to the delivery of healthcare services and the reimbursement paid for such services by the government or other third party payors, is uncertain at this time. Also, initiatives among managed care payors, conveners and referring acute care hospital systems to reduce lengths of stay and avoidable hospital admissions and to divert referrals to home health or other community-based care settings could have a continuing adverse impact on the Company’s business. Accordingly, there can be no assurance that the impact of any future healthcare legislation, regulation or actions by participants in the health care continuum will not adversely affect the Company’s business. There can be no assurance that payments under governmental and private third-party payor programs will be timely, will remain at levels similar to present levels or will, in the future, be sufficient to cover the costs allocable to patients eligible for reimbursement pursuant to such programs. The Company’s financial condition and results of operations are and will continue to be affected by the reimbursement process, which in the healthcare industry is complex and can involve lengthy delays between the time that revenue is recognized and the time that reimbursement amounts are settled. Laws and regulations governing the Medicare and Medicaid programs, and the Company’s business generally, are complex and are often subject to a number of ambiguities in their application and interpretation. The Company believes that it is in substantial compliance with all applicable laws and regulations. However, from time to time the Company and its affiliates are subject to pending or threatened lawsuits and investigations involving allegations of potential wrongdoing, some of which may be material or involve significant costs to resolve and/or defend, or may lead to other adverse effects on the Company and its affiliates including, but not limited to, fines, penalties and exclusion from participation in the Medicare and/or Medicaid programs. Concentration of Credit Risk The Company is exposed to the credit risk of its third-party customers, many of whom are in similar lines of business as the Company and are exposed to the same systemic industry risks of operations as the Company, resulting in a concentration of risk. These include organizations that utilize the Company’s rehabilitation services, staffing services and physician service offerings, engaged in similar business activities or having economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in regulatory and systemic industry conditions. Management assesses its exposure to loss on accounts at the customer level. The greatest concentration of risk exists in the Company’s rehabilitation services business where it has over 200 distinct customers, many being chain operators with more than one location. The four largest customers of the Company’s rehabilitation services business comprise $108.7 million, approximately 67%, of the outstanding contract receivables in the rehabilitation services business at September 30, 2017. One customer, which is a related party of the Company, comprises $83.2 million, approximately 52%, of the outstanding contract receivables in the rehabilitation services business at September 30, 2017. See Note 14 – “Related Party Transactions.” An adverse event impacting the solvency of any one or several of these large customers resulting in their insolvency or other economic distress would have a material impact on the Company. In July 2017, a significant customer of the Company’s rehabilitation therapy services business filed for receivership. This customer operated 65 skilled nursing facilities in six states at the time of the filing. The Company has recorded a $35.6 million non-cash impairment charge in the nine months ended September 30, 2017 and separately classified the charge in the line item “customer receivership” in the unaudited consolidated statements of operations. In the three and nine months ended September 30, 2017, the Company recognized revenues of $8.8 million and $27.6 million, respectively, for the customer in receivership compared to $9.5 million and $29.8 million, respectively, for the same periods in the prior year. In the three and nine months ended September 30, 2017, the Company recognized income from continuing operations of $1.2 million and $4.2 million, respectively, for the customer in receivership compared to $1.4 million and $5.1 million, respectively, for the same periods in the prior year. In September 2017, another customer of the Company’s rehabilitation services business filed for receivership. The Company, however, only provided services to one of the skilled nursing facilities included in the receivership filing. The Company recorded a non-cash customer receivership charge of $0.3 million in the three months ended September 30, 2017. The Company’s business is subject to a number of other known and unknown risks and uncertainties, which are discussed in Part II. Item 1A, “ Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which was filed with the SEC on March 6, 2017, and in the Company’s Quarterly Reports on Form 10-Q, including the risk factors discussed herein in Part II. Item 1A. |
Significant Transactions and Ev
Significant Transactions and Events | 9 Months Ended |
Sep. 30, 2017 | |
Significant Transactions and Events | |
Significant Transactions and Events | (3) Significant Transactions and Events Skilled Nursing Facility Divestitures The Company divested or closed 28 skilled nursing facilities in the nine months ended September 30, 2017. One skilled nursing facility located in California was closed on September 28, 2017. The skilled nursing facility remains subject to a master lease agreement and had annual revenue of $6.9 million and pre-tax net loss of $1.6 million. The Company recognized a loss of $0.5 million. One skilled nursing facility located in Colorado was divested on July 10, 2017. The skilled nursing facility was subject to a master lease agreement and had annual revenue of $5.7 million and pre-tax net loss of $2.2 million. The Company recognized a loss of $0.5 million. One skilled nursing facility located in North Carolina was divested on June 1, 2017. The skilled nursing facility was subject to a master lease agreement and had annual revenue of $6.4 million and pre-tax net loss of $1.0 million. The Company recognized a loss of $0.5 million. Eighteen skilled nursing facilities (16 owned and 2 leased) located in Kansas, Missouri, Nebraska and Iowa were divested on April 1, 2017. The 18 skilled nursing facilities had annual revenue of $110.1 million, pre-tax net loss of $10.7 million and total assets of $91.6 million. Sale proceeds of approximately $80 million, net of transaction costs, were used principally to repay the indebtedness of the skilled nursing facilities. The Company recognized a loss of $6.3 million, which is included in other loss (income) on the consolidated statements of operations. The 16 owned skilled nursing facilities qualified and were presented as assets held for sale at December 31, 2016. One of the leased skilled nursing facilities was subleased to a new operator resulting in a loss associated with a cease to use asset of $4.1 million. One skilled nursing facility located in Tennessee was divested on April 1, 2017. The skilled nursing facility was subject to a master lease agreement and had annual revenue of $7.4 million and pre-tax net income of $0.5 million. The Company recognized a loss of $0.7 million. Four skilled nursing facilities located in Massachusetts were subject to a master lease agreement and were divested on March 14, 2017. These facilities, along with two other facilities that were divested previously and subleased to a third-party operator, were sold and terminated from the master lease resulting in an annual rent credit of $1.2 million. The master lease termination resulted in a capital lease net asset and obligation write-down of $14.9 million. The four skilled nursing facilities had annual revenue of $26.7 million and pre-tax net income of $1.2 million. The Company recognized a loss of $1.4 million. Two skilled nursing facilities located in Georgia were divested on February 1, 2017 at the expiration of their respective lease terms. The two skilled nursing facilities had annual revenue of $10.6 million and pre-tax net loss of $0.4 million. The Company recognized a loss of $0.5 million. Losses are presented in other loss (income) on the consolidated statements of operations. HUD Financings In the nine months ended September 30, 2017, the Company completed the financings of three skilled nursing facilities with the U.S. Department of Housing and Urban Development (HUD) insured loans. The total loan amount of the three financings was $23.9 million. Proceeds from the financings along with other cash on hand was used to partially pay down a Real Estate Bridge Loan by $25.1 million. See Note 8 – “ Long-Term Debt – Real Estate Bridge Loans” and “ Long-Term Debt – HUD Insured Loans.” Dining and Nutrition Partnership In April 2017, the Company entered into a strategic dining and nutrition partnership to further leverage its national platforms, process expertise and technology. The relationship, which is expected to be accretive to the Company, will provide additional liquidity, cost efficiency and enhanced operational performance. |
Loss Per Share
Loss Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Loss Per Share | |
Loss Per Share | (4) The Company has three classes of common stock. Classes A and B are identical in economic and voting interests. Class C has a 1:1 voting ratio with the other two classes, representing the voting interests of the noncontrolling interest of the legacy FC-GEN owners. Class C common stock is a participating security; however, it shares in a de minimis economic interest and is therefore excluded from the denominator of the basic earnings (loss) per share (EPS) calculation. Basic EPS was computed by dividing net loss by the weighted-average number of outstanding common shares for the period. Diluted EPS is computed by dividing net loss plus the effect of assumed conversions (if applicable) by the weighted-average number of outstanding common shares after giving effect to all potential dilutive common shares. A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per common share follows (in thousands, except per share data): Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Numerator: Loss from continuing operations $ (615,022) $ (52,355) $ (804,117) $ (159,364) Less: Net loss attributable to noncontrolling interests (241,200) (31,921) (314,446) (72,895) Loss from continuing operations attributable to Genesis Healthcare, Inc. $ (373,822) $ (20,434) $ (489,671) $ (86,469) Loss from discontinued operations, net of taxes (2) (24) (70) (1) Net loss attributable to Genesis Healthcare, Inc. $ (373,824) $ (20,458) $ (489,741) $ (86,470) Denominator: Weighted-average shares outstanding for basic and diluted net loss per share 94,940 90,226 93,376 89,617 Basic and diluted net loss per common share: Loss from continuing operations attributable to Genesis Healthcare, Inc. $ (3.94) $ (0.23) $ (5.24) $ (0.96) Loss from discontinued operations, net of taxes (0.00) (0.00) (0.00) (0.00) Net loss attributable to Genesis Healthcare, Inc. $ (3.94) $ (0.23) $ (5.24) $ (0.96) The following were excluded from net loss attributable to Genesis Healthcare, Inc. and the weighted-average diluted shares computation for the three and nine months ended September 30, 2017 and 2016, as their inclusion would have been anti-dilutive (in thousands): Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Net loss Net loss Net loss Net loss attributable to attributable to attributable to attributable to Genesis Anti-dilutive Genesis Anti-dilutive Genesis Anti-dilutive Genesis Anti-dilutive Healthcare, Inc. shares Healthcare, Inc. shares Healthcare, Inc. shares Healthcare, Inc. shares Exchange of restricted stock units of noncontrolling interests $ (242,806) 61,692 $ (26,959) 64,391 $ (319,784) 62,108 $ (58,465) 64,437 Employee and director unvested restricted stock units — 40 — — — 988 — — Convertible note 113 3,000 — — 335 3,000 — — The combined impact of the assumed conversion to common stock and related tax implications attributable to the noncontrolling interest, the grants under the 2015 Omnibus Equity Incentive Plan, and the convertible note are anti-dilutive to EPS because the Company is in a net loss position for the three and nine months ended September 30, 2017 and 2016. As of September 30, 2017, there were 61,600,511 units attributable to the noncontrolling interests outstanding. In addition to the outstanding units attributable to the noncontrolling interests, the conversion of all of those units will result in the issuance of an incremental 10,726 shares of Class A common stock. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2017 | |
Segment Information | |
Segment Information | (5) Segment Information The Company has three reportable operating segments: (i) inpatient services; (ii) rehabilitation therapy services; and (iii) other services. A summary of the Company’s segmented revenues follows (in thousands, except percentages): Three months ended September 30, 2017 2016 Increase / (Decrease) Revenue Revenue Revenue Revenue Dollars Percentage Dollars Percentage Dollars Percentage Revenues: Inpatient services: Skilled nursing facilities $ 1,103,554 83.8 % $ 1,192,498 84.0 % $ (88,944) (7.5) % Assisted/Senior living facilities 24,185 1.8 % 29,423 2.1 % (5,238) (17.8) % Administration of third party facilities 2,266 0.2 % 2,659 0.2 % (393) (14.8) % Elimination of administrative services (370) — % (340) — % (30) 8.8 % Inpatient services, net 1,129,635 85.8 % 1,224,240 86.3 % (94,605) (7.7) % Rehabilitation therapy services: Total therapy services 244,471 18.6 % 261,543 18.4 % (17,072) (6.5) % Elimination intersegment rehabilitation therapy services (92,573) (7.0) % (101,156) (7.1) % 8,583 (8.5) % Third party rehabilitation therapy services 151,898 11.6 % 160,387 11.3 % (8,489) (5.3) % Other services: Total other services 42,901 3.3 % 40,376 2.8 % 2,525 6.3 % Elimination intersegment other services (8,982) (0.7) % (6,009) (0.4) % (2,973) 49.5 % Third party other services 33,919 2.6 % 34,367 2.4 % (448) (1.3) % Net revenues $ 1,315,452 100.0 % $ 1,418,994 100.0 % $ (103,542) (7.3) % Nine months ended September 30, 2017 2016 Increase / (Decrease) Revenue Revenue Revenue Revenue Dollars Percentage Dollars Percentage Dollars Percentage Revenues: Inpatient services: Skilled nursing facilities $ 3,404,181 84.0 % $ 3,595,258 82.9 % $ (191,077) (5.3) % Assisted/Senior living facilities 72,262 1.8 % 90,772 2.1 % (18,510) (20.4) % Administration of third party facilities 6,841 0.2 % 8,608 0.2 % (1,767) (20.5) % Elimination of administrative services (1,139) — % (1,077) — % (62) 5.8 % Inpatient services, net 3,482,145 86.0 % 3,693,561 85.2 % (211,416) (5.7) % Rehabilitation therapy services: Total therapy services 743,605 18.4 % 821,704 19.1 % (78,099) (9.5) % Elimination intersegment rehabilitation therapy services (287,599) (7.1) % (311,060) (7.2) % 23,461 (7.5) % Third party rehabilitation therapy services 456,006 11.3 % 510,644 11.9 % (54,638) (10.7) % Other services: Total other services 133,168 3.3 % 142,336 3.3 % (9,168) (6.4) % Elimination intersegment other services (25,459) (0.6) % (16,971) (0.4) % (8,488) 50.0 % Third party other services 107,709 2.7 % 125,365 2.9 % (17,656) (14.1) % Net revenues $ 4,045,860 100.0 % $ 4,329,570 100.0 % $ (283,710) (6.6) % A summary of the Company’s unaudited condensed consolidated statement of operations follows (in thousands): Three months ended September 30, 2017 Rehabilitation Inpatient Therapy Other Services Services Services Corporate Eliminations Consolidated Net revenues $ 1,130,005 $ 244,471 $ 42,778 $ 123 $ (101,925) $ 1,315,452 Salaries, wages and benefits 507,075 205,232 27,097 — — 739,404 Other operating expenses 442,816 19,455 15,242 — (101,926) 375,587 General and administrative costs — — — 40,732 — 40,732 Provision for losses on accounts receivable 22,078 1,974 447 688 — 25,187 Lease expense 37,895 (14) 302 487 — 38,670 Depreciation and amortization expense 51,666 3,497 167 4,060 — 59,390 Interest expense 103,306 14 9 21,102 — 124,431 Investment income — — — (1,596) — (1,596) Other loss 2,379 — — — — 2,379 Transaction costs — — — 1,056 — 1,056 Customer receivership — 297 — — — 297 Long-lived asset impairments 161,483 1,881 — — — 163,364 Goodwill and identifiable intangible asset impairments 360,046 — — — — 360,046 Equity in net (income) loss of unconsolidated affiliates — — — (571) 502 (69) (Loss) income before income tax benefit (558,739) 12,135 (486) (65,835) (501) (613,426) Income tax expense — — — 1,596 — 1,596 (Loss) income from continuing operations $ (558,739) $ 12,135 $ (486) $ (67,431) $ (501) $ (615,022) Three months ended September 30, 2016 Rehabilitation Inpatient Therapy Other Services Services Services Corporate Eliminations Consolidated Net revenues $ 1,224,580 $ 261,543 $ 40,226 $ 150 $ (107,505) $ 1,418,994 Salaries, wages and benefits 586,654 219,864 27,896 — — 834,414 Other operating expenses 428,820 18,903 10,610 — (107,505) 350,828 General and administrative costs — — — 46,545 — 46,545 Provision for losses on accounts receivable 21,088 4,722 (161) (47) — 25,602 Lease expense 34,745 24 269 474 — 35,512 Depreciation and amortization expense 53,313 2,943 163 4,685 — 61,104 Interest expense 109,339 14 10 22,449 — 131,812 Loss on extinguishment of debt — — — 15,363 — 15,363 Investment income — — — (934) — (934) Other income (4,991) — (182) — — (5,173) Transaction costs — — — 3,057 — 3,057 Equity in net (income) loss of unconsolidated affiliates — — — (1,608) 715 (893) (Loss) income before income tax benefit (4,388) 15,073 1,621 (89,834) (715) (78,243) Income tax benefit — — — (25,888) — (25,888) (Loss) income from continuing operations $ (4,388) $ 15,073 $ 1,621 $ (63,946) $ (715) $ (52,355) Nine months ended September 30, 2017 Rehabilitation Inpatient Therapy Other Services Services Services Corporate Eliminations Consolidated Net revenues $ 3,483,284 $ 743,605 $ 132,718 $ 450 $ (314,197) $ 4,045,860 Salaries, wages and benefits 1,597,007 619,928 86,365 — — 2,303,300 Other operating expenses 1,303,448 56,433 44,456 — (314,198) 1,090,139 General and administrative costs — — — 127,041 — 127,041 Provision for losses on accounts receivable 62,448 8,641 995 616 — 72,700 Lease expense 110,661 — 897 1,446 — 113,004 Depreciation and amortization expense 159,483 11,110 506 12,887 — 183,986 Interest expense 309,948 42 28 63,455 — 373,473 Loss on extinguishment of debt — — — 2,301 — 2,301 Investment income — — — (4,097) — (4,097) Other loss 15,112 732 — (242) — 15,602 Transaction costs — — — 7,862 — 7,862 Customer receivership — 35,864 — — — 35,864 Long-lived asset impairments 161,483 1,881 — — — 163,364 Goodwill and identifiable intangible asset impairments 360,046 — — — — 360,046 Equity in net (income) loss of unconsolidated affiliates — — — (1,702) 1,411 (291) (Loss) income before income tax benefit (596,352) 8,974 (529) (209,117) (1,410) (798,434) Income tax expense — — — 5,683 — 5,683 (Loss) income from continuing operations $ (596,352) $ 8,974 $ (529) $ (214,800) $ (1,410) $ (804,117) Nine months ended September 30, 2016 Rehabilitation Inpatient Therapy Other Services Services Services Corporate Eliminations Consolidated Net revenues $ 3,694,638 $ 821,704 $ 141,970 $ 366 $ (329,108) $ 4,329,570 Salaries, wages and benefits 1,748,232 689,833 96,759 — — 2,534,824 Other operating expenses 1,296,069 58,927 36,198 — (329,108) 1,062,086 General and administrative costs — — — 139,999 — 139,999 Provision for losses on accounts receivable 68,757 12,165 993 (139) — 81,776 Lease expense 107,047 71 1,209 1,469 — 109,796 Depreciation and amortization expense 167,208 9,137 805 13,672 — 190,822 Interest expense 328,385 43 30 72,395 — 400,853 Loss on extinguishment of debt — — — 15,830 — 15,830 Investment income — — — (2,073) — (2,073) Other income (4,119) — (43,965) — — (48,084) Transaction costs — — — 9,804 — 9,804 Skilled Healthcare and other loss contingency expense — — — 15,192 — 15,192 Equity in net (income) loss of unconsolidated affiliates — — — (3,894) 1,741 (2,153) (Loss) income before income tax expense (16,941) 51,528 49,941 (261,889) (1,741) (179,102) Income tax benefit — — — (19,738) — (19,738) (Loss) income from continuing operations $ (16,941) $ 51,528 $ 49,941 $ (242,151) $ (1,741) $ (159,364) The following table presents the segment assets as of September 30, 2017 compared to December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Inpatient services $ 4,376,132 $ 5,194,811 Rehabilitation therapy services 411,195 454,723 Other services 52,236 67,348 Corporate and eliminations 87,365 62,319 Total assets $ 4,926,928 $ 5,779,201 The following table presents segment goodwill as of September 30, 2017 compared to December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Inpatient services $ — $ 355,070 Rehabilitation therapy services 73,814 73,814 Other services 11,828 11,828 Total goodwill $ 85,642 $ 440,712 The Company conducted its annual goodwill impairment analysis as of September 30, 2017, resulting in an impairment charge of $351.5 million in the inpatient services segment. See Note 15 – “ Asset Impairment Charges – Goodwill. ” The divestiture of nine of the Company’s skilled nursing facilities and planned divestitures of seven other sklled nursing facilities resulted in a derecognition of goodwill in the nine months ended September 30, 2017, of $3.6 million in its inpatient services segment. See Note 3 – “ Significant Transactions and Events – Skilled Nursing Facility Divestitures .” |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | (6) Property and Equipment Property and equipment consisted of the following as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Land, buildings and improvements $ 604,985 $ 673,092 Capital lease land, buildings and improvements 745,245 818,273 Financing obligation land, buildings and improvements 2,522,415 2,584,178 Equipment, furniture and fixtures 456,990 447,767 Construction in progress 22,360 49,859 Gross property and equipment 4,351,995 4,573,169 Less: accumulated depreciation (881,049) (807,776) Net property and equipment $ 3,470,946 $ 3,765,393 In the nine months ended September 30, 2017, the Company amended one of its master lease agreements resulting in a net capital lease asset write-down of $14.9 million. See Note 3 – “ Significant Transactions and Events – Skilled Nursing Facility Divestitures.” The write-down consisted of $55.6 million of gross capital lease asset included in the line description “Capital lease land, buildings and improvements” offset by $40.7 million of accumulated depreciation. In the three and nine months ended September 30, 2017, the Company recognized an impairment charge of $163.4 million on its property and equipment. See Note 15 – “Asset Impairment Charges - Long-Lived Assets with a Definite Useful Life.” |
Goodwill and Identifiable Intan
Goodwill and Identifiable Intangible Assets | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Identifiable Intangible Assets | (7) Goodwill and Identifiable Intangible Assets The changes in the carrying value of goodwill are as follows (in thousands): Total Balance at December 31, 2016 $ 440,712 Goodwill disposal associated with inpatient divestitures (3,600) Goodwill impairment associated with inpatient segment (351,470) Balance at September 30, 2017 $ 85,642 The Company has no accumulated amortization of goodwill. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The Company conducted its annual goodwill impairment analysis as of September 30, 2017, resulting in an impairment charge of $351.5 million in the inpatient services segment. See Note 15 – “ Asset Impairment Charges – Goodwill. ” The divestiture of nine of the Company’s skilled nursing facilities and planned divestitures of seven other sklled nursing facilities resulted in a derecognition of goodwill in the nine months ended September 30, 2017, of $3.6 million in its inpatient services segment. See Note 3 – “ Significant Transactions and Events – Skilled Nursing Facility Divestitures .” Identifiable intangible assets consist of the following at September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 Weighted Average Remaining Life (Years) Customer relationship assets, net of accumulated amortization of $52,667 $ 60,166 8 Favorable leases, net of accumulated amortization of $31,406 36,517 10 Trade names 50,556 Indefinite Identifiable intangible assets $ 147,239 December 31, 2016 Weighted Average Remaining Life (Years) Customer relationship assets, net of accumulated amortization of $43,862 $ 67,348 9 Management contracts, net of accumulated amortization of $17,872 14,651 2 Favorable leases, net of accumulated amortization of $29,421 43,011 10 Trade names 50,556 Indefinite Identifiable intangible assets $ 175,566 Acquisition-related identified intangible assets consist of customer relationship assets, management contracts, favorable lease contracts and trade names. Customer relationship assets exist in the Company’s rehabilitation services, respiratory services, management services and medical staffing businesses. These assets are amortized on a straight-line basis over the expected period of benefit. Management contracts are derived through the organization of facilities under an upper payment limit supplemental payment program in Texas that provides supplemental Medicaid payments with federal matching funds for skilled nursing facilities that are affiliated with county-owned hospital districts. Under this program, the Company acts as the manager of the facilities and shares in these supplemental payments with the county hospitals. Favorable lease contracts represent the estimated value of future cash outflows of operating lease contracts compared to lease rates that could be negotiated in an arms-length transaction at the time of measurement. Favorable lease contracts are amortized on a straight-line basis over the lease terms. The Company’s trade names have value, in particular in the rehabilitation business which markets its services to other providers of skilled nursing and assisted/senior living services. The trade name asset has an indefinite life and is measured no less than annually or if indicators of potential impairment become apparent. For the three months ended September 30, 2017 and 2016, the amortization expense related to customer relationship assets totaled $2.6 million and $2.6 million, respectively. For the nine months ended September 30, 2017 and 2016, the amortization expense related to customer relationship assets totaled $7.7 million and $7.7 million, respectively. For the three months ended September 30, 2017 and 2016, the amortization expense related to management contracts totaled $2.3 million and $2.3 million, respectively. For the nine months ended September 30, 2017 and 2016, the amortization expense related to management contracts totaled $6.8 million and $6.8 million, respectively. For the three months ended September 30, 2017 and 2016, the amortization expense related to favorable leases totaled $1.7 million and $2.0 million, respectively. For the nine months ended September 30, 2017 and 2016, the amortization expense related to favorable leases totaled $5.3 million and $6.1 million, respectively. Based upon amounts recorded at September 30, 2017, total estimated twelve months ended amortization expense of identifiable intangible assets will be $17.0 million in 2018, $16.7 million in 2019, $12.6 million in 2020, $11.1 million in 2021, and $7.2 million in 2022 and $32.1 million, thereafter. Asset impairment charges for the three and nine months ended September 30, 2017, totaled $8.5 million. The Company recorded a $7.3 million impairment of its management contract assets related to the expiration of and lack of a sustained, state sponsored replacement program for the Texas Minimum Payment Amount Program (MPAP). The impairment is included in goodwill and identifiable intangible asset impairments on the consolidated statements of operations. See Note 15 – “ Asset Impairment Charges - Identifiable Intangible Assets with a Definite Useful Life – Management Contracts .” The remaining $1.2 million pertains to the impairment on favorable lease assets associated with the underperforming properties. The impairment is included in goodwill and identifiable intangible asset impairments on the consolidated statements of operations. See Note 15 – “ Asset Impairment Charges – Identifiable Intangible Assets with a Definite Useful Life – Favorable Leases .” For the three and nine months ended September 30, 2016, no impairment charges were recorded. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2017 | |
Long-Term Debt Abstract | |
Long-Term Debt | (8) Long-Term Debt Long-term debt at September 30, 2017 and December 31, 2016 consisted of the following (in thousands): September 30, 2017 December 31, 2016 Revolving credit facilities, net of debt issuance costs of $9,952 at September 30, 2017 and $9,220 at December 31, 2016 $ 351,247 $ 383,630 Term loan agreement, net of debt issuance costs of $3,312 at September 30, 2017 and $3,859 at December 31, 2016 116,290 116,174 Real estate bridge loans, net of debt issuance costs of $3,710 at September 30, 2017 and $4,400 at December 31, 2016 289,120 313,549 HUD insured loans, net of debt issuance costs of $5,396 at September 30, 2017 and $4,773 at December 31, 2016 261,370 241,570 Notes payable, net of convertible debt discount of $842 at September 30, 2017 and $990 at December 31, 2016 76,337 73,829 Mortgages and other secured debt (recourse) 12,711 13,235 Mortgages and other secured debt (non-recourse), net of debt issuance costs of $121 at September 30, 2017 and $131 at December 31, 2016 28,283 29,157 1,135,358 1,171,144 Less: Current installments of long-term debt (851,344) (24,594) Long-term debt $ 284,014 $ 1,146,550 Revolving Credit Facilities The Company’s revolving credit facilities, as amended, (the Revolving Credit Facilities) consist of a senior secured, asset-based revolving credit facility of up to $525.0 million under three separate tranches: Tranche A-1, Tranche A-2 and HUD Tranche. The Revolving Credit Facilities mature on February 2, 2020. Interest accrues at a per annum rate equal to either (x) a base rate (calculated as the highest of the (i) prime rate, (ii) the federal funds rate plus 3.00%, or (iii) LIBOR plus the excess of the applicable margin between LIBOR loans and base rate loans) plus an applicable margin or (y) LIBOR plus an applicable margin. The applicable margin is based on the level of commitments for all three tranches, and in regards to LIBOR loans (i) for Tranche A-1 ranges from 3.00% to 3.50%; (ii) for Tranche A-2 ranges from 3.00% to 3.50%; and (iii) for HUD Tranche ranges from 2.50% to 3.00%. The applicable margin is based on the level of commitments for all three tranches, and in regards to base rate loans (i) for Tranche A-1 ranges from 2.00% to 2.50%; (ii) for Tranche A-2 ranges from 2.00% to 2.50%; and (iii) for HUD Tranche ranges from 1.50% to 2.00%. Borrowing levels under the Revolving Credit Facilities are limited to a borrowing base that is computed based upon the level of the Company’s eligible accounts receivable, as defined therein. In addition to paying interest on the outstanding principal borrowed under the Revolving Credit Facilities, the Company is required to pay a commitment fee to the lenders for any unutilized commitments. The commitment fee rate ranges from 0.375% per annum to 0.50% depending upon the level of unused commitment. The Revolving Credit Facilities contain financial, affirmative and negative covenants, and events of default that are substantially identical to those of the Term Loan Agreement (as defined below), but also contain a minimum liquidity covenant and a springing minimum fixed charge coverage covenant tied to the minimum liquidity requirement. The most restrictive financial covenant is the maximum leverage ratio which requires the Company to maintain a leverage ratio, as defined, of no more than 7.25 to 1.0 through December 31, 2017 and stepping down gradually over the course of the loan to 6.5 to 1.0 beginning in 2020. Borrowings and interest rates under the three tranches were as follows at September 30, 2017: Weighted Average Revolving Credit Facilities Commitment Borrowings Interest Tranche A-1 $ 440,000 $ 300,000 5.14 % Tranche A-2 50,000 35,800 4.74 % HUD tranche 35,000 25,400 4.50 % $ 525,000 $ 361,200 5.06 % As of September 30, 2017, the Company had a total borrowing base capacity of $457.9 million with outstanding borrowings under the Revolving Credit Facilities of $361.2 million and $54.8 million of drawn letters of credit securing insurance and lease obligations, leaving the Company with approximately $41.9 million of available borrowing capacity under the Revolving Credit Facilities. Term Loan Agreement The Company and certain of its affiliates, including FC-GEN Operations Investment, LLC (the Borrower) are party to a four-year term loan agreement (the Term Loan Agreement) with an affiliate of Welltower Inc. (Welltower) and an affiliate of Omega Healthcare Investors, Inc. (Omega). The Term Loan Agreement provides for term loans (the Term Loans) in the aggregate principal amount of $120.0 million, with scheduled annual amortization of 2.5% of the initial principal balance in years one, two and three, and 5.0% in year four. The Term Loan Agreement has a maturity date of July 29, 2020. Borrowings under the Term Loan Agreement bear interest at a rate equal to a base rate (subject to a floor of 1.00%) or an ABR rate (subject to a floor of 2.0%), plus in each case a specified applicable margin. The initial applicable margin for base rate loans is 13.0% per annum and the initial applicable margin for ABR rate loans is 12.0% per annum. At the Company’s election, with respect to either base rate or ABR rate loans, up to 2.0% of the interest may be paid either in cash or paid-in-kind. As of September 30, 2017, the Term Loans had an outstanding principal balance of $119.6 million. The Term Loan Agreement is secured by a first priority lien on the equity interests of the subsidiaries of the Company and the Borrower as well as certain other assets of the Company, the Borrower and their subsidiaries, subject to certain exceptions. The Term Loan Agreement is also secured by a junior lien on the assets that secure the Revolving Credit Facilities, as amended, on a first priority basis. Welltower and Omega, or their respective affiliates, are each currently landlords under certain master lease agreements to which the Company and/or its affiliates are tenants. The Term Loan Agreement contains financial, affirmative and negative covenants, and events of default that are customary for debt securities of this type. Financial covenants include four maintenance covenants which require the Company to maintain a maximum leverage ratio, a minimum interest coverage ratio, a minimum fixed charge coverage ratio and maximum capital expenditures. The most restrictive financial covenant is the maximum leverage ratio which requires the Company to maintain a leverage ratio, as defined therein, of no more than 7.25 to 1.0 through December 31, 2017 and stepping down gradually over the course of the loan to 6.5 to 1.0 beginning in 2020. Real Estate Bridge Loans The Company is party to four separate bridge loan agreements with Welltower (Welltower Bridge Loans). The Welltower Bridge Loans have an effective date of October 1, 2016 and are the result of the combination of two real estate bridge loans executed in 2015 upon the Company’s separate acquisitions of the real property of 87 skilled nursing and assisted living facilities. The Welltower Bridge Loans are subject to payments of interest only during the term with a balloon payment due at maturity, provided, that to the extent the subsidiaries receive any net proceeds from the sale and/or refinance of the underlying facilities such net proceeds are required to be used to repay the outstanding principal balance of the Welltower Bridge Loans. Each Welltower Bridge Loan has a maturity date of January 1, 2022 and a 10.0% interest rate that increases annually by 0.25% beginning January 1, 2018. At September 30, 2017, the Welltower Bridge Loans are secured by a mortgage lien on the real property of the 39 facilities and a second lien on certain receivables of the operators of 24 of the facilities. In the nine months ended September 30, 2017, the Welltower Bridge Loans were paid down $27.6 million, $9.0 million for the sale of three skilled nursing facilities and $18.6 million for the refinancing of bridge loan debt with HUD insured loans. See Note 3 – “ Significant Transactions and Events - Skilled Nursing Facility Divestitures” and “ Significant Transactions and Events - HUD Financings.” Of the four original separate bridge loan agreements, one was fully retired using proceeds from the sale of the three skilled nursing facilities in the nine months ended September 30, 2017. The three remaining Welltower Bridge Loans have an outstanding principal balance of $282.9 million at September 30, 2017. On April 1, 2016, the Company acquired one skilled nursing facility and entered into a $9.9 million real estate bridge loan (the Other Real Estate Bridge Loan). The Other Real Estate Bridge Loan has a term of three years and accrues interest at a rate equal to LIBOR plus a margin of 4.00%. The Other Real Estate Bridge Loan bore interest of 5.23% at September 30, 2017. The Other Real Estate Bridge Loan is subject to payments of interest only during the term with a balloon payment due at maturity, provided, that to the extent the subsidiaries receive any net proceeds from the sale and/or refinance of the underlying facilities such net proceeds are required to be used to pay down the outstanding principal balance of the Other Real Estate Bridge Loan. The Other Real Estate Bridge Loan has an outstanding principal balance of $9.9 million at September 30, 2017. HUD Insured Loans As of September 30, 2017 the Company has 29 skilled nursing facility loans insured by HUD with a combined aggregate principal balance of $266.8 million, which includes a $13.7 million debt premium on 10 skilled nursing facility loans established in purchase accounting in connection with the Combination. In the nine months ended September 30, 2017, 13 skilled nursing facilities with HUD insured loans were sold and the loans totaling $63.1 million were retired. See Note 3 – “ Significant Transactions and Events - Skilled Nursing Facility Divestitures.” Also in the nine months ended September 30, 2017, three skilled nursing facilities were financed with HUD insured loans for $23.9 million. See Note 3 – “ Significant Transactions and Events - HUD Financings.” The HUD insured loans have an original amortization term of 30 to 35 years and an average remaining term of 30 years with fixed interest rates ranging from 3.0% to 4.2% and a weighted average interest rate of 3.5%. Depending on the mortgage agreement, prepayments are generally allowed only after 12 months from the inception of the mortgage. Prepayments are subject to a penalty of 10% of the remaining principal balances in the first year and the prepayment penalty decreases each subsequent year by 1% until no penalty is required thereafter. Any further HUD insured loans will require additional HUD approval. All HUD insured loans are non-recourse loans to the Company. All loans are subject to HUD regulatory agreements that require escrow reserve funds to be deposited with the loan servicer for mortgage insurance premiums, property taxes, insurance and for capital replacement expenditures. As of September 30, 2017, the Company has total escrow reserve funds of $21.2 million with the loan servicer that are reported within prepaid expenses. Notes Payable In connection with Welltower’s sale of 64 skilled nursing facilities to Second Spring Healthcare Investments (Second Spring) on November 1, 2016, the Company issued a note totaling $51.2 million to Welltower. The note accrues cash interest at 3% and paid-in-kind interest at 7%. Cash interest is paid and paid-in-kind interest accretes the principal amount semi-annually every May 1 and November 1. The note matures on October 30, 2020. The note has an outstanding accreted balance of $53.0 million at September 30, 2017. In connection with Welltower’s sale of 28 skilled nursing facilities to Cindat Best Years Welltower JV LLC (CBYW) on December 23, 2016, the Company issued two notes totaling $23.7 million to Welltower. The first note has an initial principal balance of $11.7 million and accrues cash interest at 3% and paid-in-kind interest at 7%. Cash interest is paid and paid-in-kind interest accretes the principal amount semi-annually every June 15 and December 15. The note matures on December 15, 2021. The note has an outstanding accreted principal balance of $12.1 million at September 30, 2017. The second note has an initial principal balance of $12.0 million and accrues cash interest at 3% and paid-in-kind interest at 3%. Cash interest is paid and paid-in-kind interest accretes the principal amount semi-annually every June 15 and December 15. From the second anniversary up to the day before the note matures, CBYW can convert all or any portion of the note into fully paid shares of common stock at the conversion rate of 3,000,000 shares of common stock per the full accreted principal amount of the note. The note matures on December 15, 2021. The note has an outstanding accreted principal balance of $12.2 million at September 30, 2017. Other Debt Mortgages and other secured debt (recourse). The Company carries mortgage loans and notes payable on certain of its corporate office buildings and other acquired assets. The loans are secured by the underlying real property and have fixed or variable rates of interest with a weighted average interest rate of 3.3% at September 30, 2017, with maturity dates ranging from 2018 to 2020. Mortgages and other secured debt (non-recourse). Loans are carried by certain of the Company’s consolidated joint ventures. The loans consist principally of revenue bonds and secured bank loans. Loans are secured by the underlying real and personal property of individual facilities and have fixed or variable rates of interest with a weighted average interest rate of 4.6% at September 30, 2017. Maturity dates range from 2018 to 2034. Loans are labeled “ non-recourse” because neither the Company nor any of its wholly owned subsidiaries is obligated to perform under the respective loan agreements. The aggregate principal balance of these loans includes a $1.6 million debt premium on one debt instrument. The Company’s consolidated current installment of long-term debt increased $11.5 million due to the reclassification of a non-recourse loan of $11.5 million, which has a maturity date of March 27, 2018. Debt Covenants The Revolving Credit Facilities, the Term Loan Agreement and the Welltower Bridge Loans (collectively, the Credit Facilities) each contain a number of financial, affirmative and negative covenants, including a maximum leverage ratio, a minimum interest coverage ratio, a minimum fixed charge coverage ratio, a springing minimum fixed charge coverage ratio tied to minimum liquidity and maximum capital expenditures. At September 30, 2017, the Company was not in compliance with certain of the financial covenants contained in the Credit Facilities. The Company received timely waivers from the counterparties to the Term Loan Agreement and the Welltower Bridge Loans for any and all breaches of financial or other covenants as of September 30, 2017. The Company is engaged in discussions with our counterparties to the Revolving Credit Parties to secure a 90-day forbearance agreement through late January 2018. The Company’s ability to maintain compliance with its debt covenants depends in part on management’s ability to increase revenue and control costs. Should the Company fail to comply with its debt covenants at a future measurement date, it would, absent necessary and timely waivers and/or amendments, be in default under certain of its existing credit agreements. To the extent any cross-default provisions may apply, the default would have an even more significant impact on the Company’s financial position. The Company believes that it is in the best interests of all creditors to grant necessary waivers or reach negotiated settlements to enable the Company to execute and complete the Restructuring Plans in order to establish a sustainable capital structure. However, there can be no assurance that such timely and adequate waivers will be received in future periods or such settlements will be reached or executed. If the defaults are not cured within applicable cure periods, if any, and if waivers or other necessary relief are not obtained, the defaults can cause acceleration of the Company’s financial obligations under certain of its agreements, which the Company may not be in a position to satisfy. There can be no assurances that any of these efforts will prove successful. In the event of a failure to obtain timely and necessary waivers or otherwise achieve a viable restructuring of the Company’s financial obligations, it may be forced to seek reorganization under the U.S. Bankruptcy Code. The maturity of total debt of $1,143.3 million, excluding debt issuance costs and other non-cash debt discounts and premiums, at September 30, 2017 is as follows (in thousands): Twelve months ended September 30, 2018 $ 28,372 2019 17,584 2020 486,141 2021 59,069 2022 313,491 Thereafter 238,686 Total debt maturity $ 1,143,343 The debt maturity table has been prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, the realization of assets and the satisfaction of liabilities in the normal course of business for the 12-month period following the date of the consolidated financial statements. However, for the reasons described in Note 1 – “ General Information – Going Concern Considerations ,” $851.3 million, related to several of the Company’s debt instruments with the stated maturities as summarized above are classified as a current liability at September 30, 2017. These debt instruments include the Revolving Credit Facilities, the Term Loan Agreement, the Welltower Bridge Loans and the Notes Payable. |
Leases and Lease Commitments
Leases and Lease Commitments | 9 Months Ended |
Sep. 30, 2017 | |
Leases and Lease Commitments | |
Leases and Lease Commitments | (9) Leases and Lease Commitments The Company leases certain facilities under capital and operating leases. Future minimum payments for the next five years and thereafter under such leases at September 30, 2017 are as follows (in thousands): Twelve months ended September 30, Capital Leases Operating Leases 2018 $ 90,425 $ 142,646 2019 93,333 139,688 2020 92,453 139,419 2021 94,561 135,437 2022 96,755 112,149 Thereafter 2,967,233 227,737 Total future minimum lease payments 3,434,760 $ 897,076 Less amount representing interest (2,439,736) Capital lease obligation 995,024 Less current portion (949,050) Long-term capital lease obligation $ 45,974 The lease commitment table has been prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, the realization of assets and the satisfaction of liabilities in the normal course of business for the 12-month period following the date of the consolidated financial statements. However, for the reasons described in Note 1 – “ General Information – Going Concern Considerations ,” $949.1 million, related to several of the Company’s capital lease commitments with the stated maturities as summarized above are classified as a current liability at September 30, 2017. While obligations under the operating leases are not included on the balance sheet, approximately $617.8 million will become due and payable, if defaulted upon. Capital Lease Obligations The capital lease obligations represent the present value of future minimum lease payments under such capital lease and cease to use arrangements and bear a weighted average imputed interest rate of 10.0% at September 30, 2017, and mature at dates ranging from 2017 to 2047. Deferred Lease Balances At September 30, 2017 and December 31, 2016, the Company had $36.5 million and $43.0 million, respectively, of favorable leases net of accumulated amortization, included in identifiable intangible assets, and $19.0 million and $28.8 million, respectively, of unfavorable leases net of accumulated amortization included in other long-term liabilities on the consolidated balance sheet. Favorable and unfavorable lease assets and liabilities arise through the acquisition of operating leases in place that requires those contracts be recorded at their then fair value. The fair value of a lease is determined through a comparison of the actual rental rate with rental rates prevalent for similar assets in similar markets. A favorable lease asset to the Company represents a rental stream that is below market, and conversely an unfavorable lease is one with its cost above market rates. These assets and liabilities amortize as lease expense over the remaining term of the respective leases on a straight-line basis. At September 30, 2017 and December 31, 2016, the Company had $34.4 million and $31.6 million, respectively, of deferred straight-line rent balances included in other long-term liabilities on the consolidated balance sheet. Lease Covenants Certain lease agreements contain a number of restrictive covenants that, among other things, and subject to certain exceptions, impose operating and financial restrictions on the Company and its subsidiaries. These leases also require the Company to meet defined financial covenants, including a minimum level of consolidated liquidity, a maximum consolidated net leverage ratio and a minimum consolidated fixed charge coverage. The Company has master lease agreements with Welltower, Sabra Health Care REIT, Inc. (Sabra), Second Spring and Omega (collectively, the Master Lease Agreements). The Master Lease Agreements each contain a number of financial, affirmative and negative covenants, including a maximum leverage ratio, a minimum fixed charge coverage ratio, and minimum liquidity. At September 30, 2017, the Company is not in compliance with the financial covenants contained in the Master Lease Agreements. The Company received waivers from the counterparties to the Master Lease Agreements for any and all breaches of financial and other covenants as of September 30, 2017. The Company has a master lease agreement with CBYW involving 28 of its facilities. The Company did not meet certain financial covenants contained in this master lease agreement at September 30, 2017. The Company received a waiver for these covenant breaches through October 24, 2019. At September 30, 2017, the Company did not meet certain financial covenants contained in three leases related to 26 of its facilities. The Company is and expects to continue to be current in the timely payment of its obligations under such leases. These leases do not have cross default provisions, nor do they trigger cross default provisions in any of the Company’s other loan or lease agreements. The Company will continue to work with the related credit parties to amend such leases and the related financial covenants. The Company does not believe the breach of such financial covenants has a material adverse impact on it at September 30, 2017. The Company has been afforded certain cure rights to such defaults by posting collateral in the form of additional letters of credit or security deposit. The Company’s ability to maintain compliance with its lease covenants depends in part on management’s ability to increase revenue and control costs. Due to continuing changes in the healthcare industry, as well as the uncertainty with respect to changing referral patterns, patient mix, and reimbursement rates, it is possible that future operating performance may not generate sufficient operating results to maintain compliance with its quarterly lease covenant compliance requirements. Should the Company fail to comply with its lease covenants at a future measurement date, it would, absent necessary and timely waivers and/or amendments, be in default under certain of its existing lease agreements. To the extent any cross-default provisions may apply, the default would have an even more significant impact on the Company’s financial position. The Company believes that it is in the best interests of all creditors to grant necessary and timely waivers or reach negotiated settlements to enable the Company to execute and complete the Restructuring Plans in order to establish a sustainable capital structure. However, there can be no assurance that such waivers will be received in future periods or such settlements will be reached. If the defaults are not cured within applicable cure periods, if any, and if waivers or other relief are not obtained timely, the defaults can cause acceleration of the Company’s financial obligations under certain of its agreements, which the Company may not be in a position to satisfy. There can be no assurances that any of these efforts will prove successful. In the event of a failure to obtain necessary waivers or otherwise achieve a viable restructuring of the Company’s financial obligations, it may be forced to seek reorganization under the U.S. Bankruptcy Code. |
Financing Obligation
Financing Obligation | 9 Months Ended |
Sep. 30, 2017 | |
Financing Obligation | |
Financing Obligation | (10) Financing obligations represent the present value of future minimum lease payments under such lease arrangements and bear a weighted average imputed interest rate of 10.6% at September 30, 2017, and mature at dates ranging from 2021 to 2043. Future minimum payments for the next five years and thereafter under leases classified as financing obligations at September 30, 2017 are as follows (in thousands): Twelve months ended September 30, 2018 $ 275,150 2019 281,193 2020 287,838 2021 294,677 2022 292,964 Thereafter 7,929,586 Total future minimum lease payments 9,361,408 Less amount representing interest (6,444,677) Financing obligations $ 2,916,731 Less current portion (2,908,020) Long-term financing obligations $ 8,711 The financing obligation table has been prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, the realization of assets and the satisfaction of liabilities in the normal course of business for the 12-month period following the date of the consolidated financial statements. However, for the reasons described in Note 1 – “ General Information – Going Concern Considerations ,” $2.9 billion, related to several of the Company’s financing obligation commitments with the stated maturities as summarized above are classified as a current liability at September 30, 2017. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (11) Income Taxes The Company effectively owns 60.6% of FC-GEN, an entity taxed as a partnership for U.S. income tax purposes. This is the Company’s only source of taxable income. FC-GEN is subject to income taxes in several U.S. state and local jurisdictions. The income taxes assessed by these jurisdictions are included in the Company’s tax provision, but at its 60.6% ownership of FC-GEN. For the three months ended September 30, 2017, the Company recorded income tax expense of $1.6 million from continuing operations, representing an effective tax rate of (0.3)%, compared to income tax benefit of $25.9 million from continuing operations, representing an effective tax rate of 33.1%, for the same period in 2016. For the nine months ended September 30, 2017, the Company recorded income tax expense of $5.7 million from continuing operations, representing an effective tax rate of (0.7)%, compared to income tax benefit of $19.7 million from continuing operations, representing an effective tax rate of 11.0%, for the same period in 2016. The change in the effective tax rate for the three and nine months ended September 30, 2017, is attributable to the following: · a one-time adjustment to increase the Company’s deferred tax liability that was recorded in the nine months ended September 30, 2016 reporting period of $3.0 million; · in the three months ended September 30, 2016 reporting period, the Company released a $28.2 million FASB Interpretation No. 48 (FIN 48) reserve due to the expiration of the statute of limitations regarding Sun Healthcare’s utilization of its net operating loss carryforward to offset built-in-gain pursuant to Internal Revenue Code (IRC) Section 382, significantly reducing the quarterly accrual of interest and penalty under FIN 48; · in the three months ended September 30, 2017, the Company increased its deferred tax liability to revise a previously concluded tax position of $11.5 million; and · in the three months ended September 30, 2017, the Company impaired the goodwill recorded on its inpatient business operating segment which resulted in a decrease to the Company’s deferred tax liability of $9.7 million. The Company continues to assess the requirement for, and amount of, a valuation allowance in accordance with the more likely than not standard. Management had previously determined that the Company would not realize its deferred tax assets and established a valuation allowance against the deferred tax assets. As of September 30, 2017, management has determined that the valuation allowance is still necessary. The Company’s Bermuda captive insurance company is expected to generate positive U.S. federal taxable income in 2017, with no net operating loss to offset its taxable income. The captive also does not have any tax credits to offset its U.S. federal income tax. The Company provides rehabilitation therapy services within the People’s Republic of China and Hong Kong. At September 30, 2017, these business operations remain in their respective startup stage. Management does not anticipate these operations will generate taxable income in the near term. The operations currently do not have a material effect on the Company’s effective tax rate. Exchange Rights and Tax Receivable Agreement Following the Combination, the owners of FC-GEN have the right to exchange their membership units in FC-GEN , along with an equivalent number of Class C shares, for shares of Class A common stock of the Company or cash, at the Company’s option. As a result of such exchanges, the Company’s membership interest in FC-GEN would increase and its purchase price would be reflected in its share of the tax basis of FC-GEN’s tangible and intangible assets. Any resulting increases in tax basis are likely to increase tax depreciation and amortization deductions and, therefore, reduce the amount of income tax the Company would otherwise be required to pay in the future. Any such increase would also decrease gain (or increase loss) on future dispositions of the affected assets. There were exchanges of 2,248,869 FC-GEN units and Class C shares during the nine months ended September 30, 2017 equating to 2,249,256 Class A shares. The exchanges during the nine months ended September 30, 2017 resulted in a $14.5 million IRC Section 754 tax basis step-up in the tax deductible goodwill of FC-GEN. There were exchanges of 200,000 FC-GEN units and Class C shares during the nine months ended September 30, 2016 equating to 200,034 Class A shares. The exchanges during the nine months ended September 30, 2016 resulted in a $0.9 million IRC Section 754 tax basis step-up in the tax deductible goodwill of FC-GEN. Concurrent with the Combination, the Company entered into a tax receivable agreement (TRA) with the owners of FC-GEN. The agreement provides for the payment by the Company to the owners of FC-GEN of 90% of the cash savings, if any, in U.S. federal, state and local income tax that the Company actually realizes as a result of (i) the increases in tax basis attributable to the owners of FC-GEN and (ii) tax benefits related to imputed interest deemed to be paid by the Company as a result of the TRA. Under the TRA, the benefits deemed realized by the Company as a result of the increase in tax basis attributable to the owners of FC-GEN generally will be computed by comparing the actual income tax liability of the Company to the amount of such taxes that the Company would have been required to pay had there been no such increase in tax basis. Estimating the amount of payments that may be made under the TRA is by its nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors. The actual increase in tax basis and deductions, as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, including: · the timing of exchanges—for instance, the increase in any tax deductions will vary depending on the fair value of the depreciable or amortizable assets of FC-GEN and its subsidiaries at the time of each exchange, which fair value may fluctuate over time; · the price of shares of Company Class A common stock at the time of the exchange—the increase in any tax deductions, and the tax basis increase in other assets of FC-GEN and its subsidiaries is directly proportional to the price of shares of Company Class A common stock at the time of the exchange; · the amount and timing of the Company’s income—the Company is required to pay 90% of the deemed benefits as and when deemed realized. If FC-GEN does not have taxable income, the Company is generally not required (absent a change of control or circumstances requiring an early termination payment) to make payments under the TRA for that taxable year because no benefit will have been actually realized. However, any tax benefits that do not result in realized benefits in a given tax year likely will generate tax attributes that may be utilized to generate benefits in previous or future tax years. The utilization of such tax attributes will result in payments under the TRA; and · future tax rates of jurisdictions in which the Company has tax liability. The TRA also provides that upon certain mergers, asset sales, other forms of business combinations or other changes of control, FC-GEN (or its successor’s) obligations under the TRA would be based on certain assumptions defined in the TRA. As a result of these assumptions, FC-GEN could be required to make payments under the TRA that are greater or less than the specified percentage of the actual benefits realized by the Company that are subject to the TRA. In addition, if FC-GEN elects to terminate the TRA early, it would be required to make an early termination payment, which upfront payment may be made significantly in advance of the anticipated future tax benefits. Payments generally are due under the TRA within a specified period of time following the filing of FC-GEN’s U.S. federal and state income tax return for the taxable year with respect to which the payment obligation arises. Payments under the TRA generally will be based on the tax reporting positions that FC-GEN will determine. Although FC-GEN does not expect the Internal Revenue Service (IRS) to challenge the Company’s tax reporting positions, FC-GEN will not be reimbursed for any overpayments previously made under the TRA, but any overpayments will reduce future payments. As a result, in certain circumstances, payments could be made under the TRA in excess of the benefits that FC-GEN actually realizes in respect of the tax attributes subject to the TRA. The term of the TRA generally will continue until all applicable tax benefits have been utilized or expired, unless the Company exercises its right to terminate the TRA and make an early termination payment. In certain circumstances (such as certain changes in control, the election of the Company to exercise its right to terminate the agreement and make an early termination payment or an IRS challenge to a tax basis increase) it is possible that cash payments under the TRA may exceed actual cash savings. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | (12) Loss Reserves For Certain Self-Insured Programs General and Professional Liability and Workers’ Compensation The Company self-insures for certain insurable risks, including general and professional liabilities and workers’ compensation liabilities through the use of self-insurance or retrospective and self-funded insurance policies and other hybrid policies, which vary among states in which the Company operates, including wholly owned captive insurance subsidiaries, to provide for potential liabilities for general and professional liability claims and workers’ compensation claims. Policies are typically written for a duration of 12 months and are measured on a “claims made” basis. Regarding workers’ compensation, the Company self-insures to its deductible and purchases statutorily required insurance coverage in excess of its deductible. There is a risk that amounts funded by the Company’s self-insurance programs may not be sufficient to respond to all claims asserted under those programs. Insurance reserves represent estimates of future claims payments. This liability includes an estimate of the development of reported losses and losses incurred but not reported. Provisions for changes in insurance reserves are made in the period of the related coverage. The Company also considers amounts that may be recovered from excess insurance carriers in estimating the ultimate net liability for such risks. The Company’s management employs its judgment and periodic independent actuarial analysis in determining the adequacy of certain self-insured workers’ compensation and general and professional liability obligations recorded as liabilities in the Company’s financial statements. The Company evaluates the adequacy of its self-insurance reserves on a semi-annual basis or more frequently when it is aware of changes to its incurred loss patterns that could impact the accuracy of those reserves. The methods of making such estimates and establishing the resulting reserves are reviewed periodically and are based on historical paid claims information and nationwide nursing home trends. The foundation for most of these methods is the Company’s actual historical reported and/or paid loss data. Any adjustments resulting therefrom are reflected in current earnings. Claims are paid over varying periods, and future payments may be different than the estimated reserves. The Company utilizes third-party administrators (TPAs) to process claims and to provide it with the data utilized in its assessments of reserve adequacy. The TPAs are under the oversight of the Company’s in-house risk management and legal functions. These functions ensure that the claims are properly administered so that the historical data is reliable for estimation purposes. Case reserves, which are approved by the Company’s legal and risk management departments, are determined based on an estimate of the ultimate settlement and/or ultimate loss exposure of individual claims. The reserves for loss for workers’ compensation risks are discounted based on actuarial estimates of claim payment patterns using a discount rate of approximately 1% for each policy period presented. The discount rate for the current policy year is 1.48%. The discount rates are based upon the risk-free rate for the appropriate duration for the respective policy year. The removal of discounting would have resulted in an increased reserve for workers’ compensation risks of $6.5 million and $8.9 million as of September 30, 2017 and December 31, 2016, respectively. The reserves for general and professional liability are recorded on an undiscounted basis. For the three and nine months ended September 30, 2017 and 2016, the provision for general and professional liability risk totaled $33.8 million and $34.1 million, respectively. For the nine months ended September 30, 2017 and 2016, the provision for general and professional liability risk totaled $102.2 million and $104.3 million, respectively. The reserves for general and professional liability were $425.6 million and $392.1 million as of September 30, 2017 and December 31, 2016, respectively. For the three months ended September 30, 2017 and 2016, the provision for workers’ compensation risk totaled $16.4 million and $20.2 million, respectively. For the nine months ended September 30, 2017 and 2016, the provision for workers’ compensation risk totaled $45.3 million and $42.2 million, respectively. The reserves for workers’ compensation risks were $198.1 million and $226.0 million as of September 30, 2017 and December 31, 2016, respectively. Health Insurance The Company offers employees an option to participate in self-insured health plans. Health insurance claims are paid as they are submitted to the plans’ administrators. The Company maintains an accrual for claims that have been incurred but not yet reported to the plans’ administrators and therefore have not yet been paid. This accrual for incurred but not yet reported claims was $18.1 million and $19.6 million as of September 30, 2017 and December 31, 2016, respectively. The liability for the self-insured health plan is recorded in accrued compensation in the consolidated balance sheets. Although management believes that the amounts provided in the Company’s consolidated financial statements are adequate and reasonable, there can be no assurances that the ultimate liability for such self-insured risks will not exceed management’s estimates. Legal Proceedings The Company and certain of its subsidiaries are involved in various litigation and regulatory investigations arising in the ordinary course of business. While there can be no assurance, based on the Company’s evaluation of information currently available, with the exception of the specific matters noted below, management does not believe the results of such litigation and regulatory investigations would have a material adverse effect on the results of operations, financial position or cash flows of the Company. However, the Company’s assessment of materiality may be affected by limited information (particularly in the early stages of government investigations). Accordingly, the Company’s assessment of materiality may change in the future based upon availability of discovery and further developments in the proceedings at issue. The results of legal proceedings are inherently uncertain, and material adverse outcomes are possible. From time to time the Company may enter into confidential discussions regarding the potential settlement of pending investigations or litigation. There are a variety of factors that influence the Company’s decisions to settle and the amount it may choose to pay, including the strength of the Company’s case, developments in the investigation or litigation, the behavior of other interested parties, the demand on management time and the possible distraction of the Company’s employees associated with the case and/or the possibility that the Company may be subject to an injunction or other equitable remedy. The settlement of any pending investigation, litigation or other proceedings could require the Company to make substantial settlement payments and result in its incurring substantial costs. Settlement Agreement On June 9, 2017, the Company and the U.S. Department of Justice (the DOJ) entered into a settlement agreement regarding four matters arising out of the activities of Skilled or Sun Healthcare prior to their operations becoming part of the Company’s operations (collectively, the Successor Matters). The four matters are: the Creekside Hospice Litigation, the Therapy Matters Investigation, the Staffing Matters Investigation and the SunDance Part B Therapy Matter (each as defined below). The Company agreed to the settlement in order to resolve the allegations underlying the Successor Matters and to avoid the uncertainty and expense of litigation. The settlement agreement calls for payment of a collective settlement amount of $52.7 million (the Settlement Amount), including separate Medicaid repayment agreements with each affected state Medicaid program. The Settlement Amount has been recorded fully in accrued expenses in the consolidated balance sheets at December 31, 2016. The Company will remit the Settlement Amount over a period of five (5) years. The first installment was paid in June 2017. The remaining outstanding Settlement Amount at September 30, 2017 is $49.2 million, of which $9.0 million is recorded in accrued expenses and $40.2 million is recorded in other long-term liabilities. Creekside Hospice Litigation On August 2, 2013, the United States Attorney for the District of Nevada and the Civil Division of the DOJ informed Skilled that its Civil Division was investigating Skilled, as well as its then subsidiary, Creekside Hospice II, LLC, for possible violations of federal and state healthcare fraud and abuse laws and regulations (the Creekside Hospice Litigation). Those laws could have included the federal False Claims Act (FCA) and the Nevada False Claims Act (NFCA). The FCA provides for civil and administrative fines and penalties, plus treble damages. The NFCA provides for similar fines and penalties, including treble damages. Violations of those federal or state laws could also subject the Company and/or its subsidiaries to exclusion from participation in the Medicare and Medicaid programs. On or about August 6, 2014, in relation to the investigation the DOJ filed a notice of intervention in two pending qui tam proceedings filed by private party relators under the FCA and the NFCA and advised that it intended to take over the actions. The DOJ filed its complaint in intervention on November 25, 2014, against Creekside, Skilled Healthcare Group, Inc., and Skilled Healthcare, LLC, asserting, among other things, that certain claims for hospice services provided by Creekside in the time period 2010 to 2013 (prior to the Combination) did not meet Medicare requirements for reimbursement and were in violation of the civil False Claims Act. Therapy Matters Investigation In February 2015, representatives of the DOJ informed the Company that they were investigating the provision of therapy services at certain Skilled facilities from 2005 through 2013 (prior to the Combination) and may pursue legal action against the Company and certain of its subsidiaries including Hallmark Rehabilitation GP, LLC for alleged violations of the federal and state healthcare fraud and abuse laws and regulations related to such services (the Therapy Matters Investigation). Those laws could have included the FCA and similar state laws. Staffing Matters Investigation In February 2015, representatives of the DOJ informed the Company that it intended to pursue legal action against the Company and certain of its subsidiaries related to staffing and certain quality of care allegations at certain Skilled facilities that occurred prior to the Combination, related to the issues adjudicated against the Company and those subsidiaries in a previously disclosed class action lawsuit that Skilled settled in 2010 (the Staffing Matters Investigation). Those laws could have included the FCA and similar state laws. SunDance Part B Therapy Matter A subsidiary of Sun Healthcare, SunDance Rehabilitation Corp. (SunDance), operates an outpatient agency licensed to provide Medicare Part B therapy services at assisted/senior living facilities in Georgia and is a party to a qui tam proceeding that was filed by a private party relator under the FCA. No SunDance agencies outside of Georgia are part of the qui tam proceeding. The Civil Division of the United States Attorney's Office for the District of Georgia filed a notice of intervention in this matter in March 2016 and asserts that certain SunDance claims for therapy services did not meet Medicare requirements for reimbursement. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value of Financial Instruments | |
Fair Value Measurements | (13) The Company’s financial instruments consist primarily of cash and cash equivalents, restricted cash and investments in marketable securities, accounts receivable, accounts payable and current and long-term debt. The Company’s financial instruments, other than its accounts receivable and accounts payable, are spread across a number of large financial institutions whose credit ratings the Company monitors and believes do not currently carry a material risk of non-performance. Certain of the Company’s financial instruments contain an off-balance-sheet risk, in the form of outstanding letters of credit of $54.8 million under the Company’s letter of credit sub-facility on its Revolving Credit Facilities as of September 30, 2017. These letters of credit are principally pledged to landlords and insurance carriers as collateral. The Company is not involved in any other off-balance-sheet arrangements that have or are reasonably likely to have a material current or future impact on its financial condition, changes in financial condition, revenue or expense, results of operations, liquidity, capital expenditures, or capital resources. Recurring Fair Value Measures Fair value is defined as an exit price (i.e., the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as shown below. An instrument’s classification within the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement. Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 — Inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability. Level 3 — Inputs that are unobservable for the asset or liability based on the Company’s own assumptions (about the assumptions market participants would use in pricing the asset or liability). The tables below present the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands): Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Active Markets for Significant Other Unobservable September 30, Identical Assets Observable Inputs Inputs Assets: 2017 (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ 50,591 $ 50,591 $ — $ — Restricted cash and equivalents 16,018 16,018 — — Restricted investments in marketable securities 124,358 124,358 — — Total $ 190,967 $ 190,967 $ — $ — Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Active Markets for Significant Other Unobservable December 31, Identical Assets Observable Inputs Inputs Assets: 2016 (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ 51,408 $ 51,408 $ — $ — Restricted cash and equivalents 12,052 12,052 — — Restricted investments in marketable securities 143,974 143,974 — — Total $ 207,434 $ 207,434 $ — $ — The Company places its cash and cash equivalents and restricted investments in marketable securities in quality financial instruments and limits the amount invested in any one institution or in any one type of instrument. The Company has not experienced any significant losses on such investments. Debt Instruments The table below shows the carrying amounts and estimated fair values of the Company’s primary long-term debt instruments (in thousands): September 30, 2017 December 31, 2016 Carrying Value Fair Value Carrying Value Fair Value Revolving credit facilities $ 351,247 $ 351,247 $ 383,630 $ 383,630 Term loan agreement 116,290 116,290 116,174 116,174 Real estate bridge loans 289,120 289,120 313,549 313,549 HUD insured loans 261,370 248,185 241,570 226,983 Notes payable 76,337 76,337 73,829 73,829 Mortgages and other secured debt (recourse) 12,711 12,711 13,235 13,235 Mortgages and other secured debt (non-recourse) 28,283 28,283 29,157 29,157 $ 1,135,358 $ 1,122,173 $ 1,171,144 $ 1,156,557 The fair value of debt is based upon market prices or is computed using discounted cash flow analysis, based on the Company’s estimated borrowing rate at the end of each fiscal period presented. The Company believes that the inputs to the pricing models qualify as Level 2 measurements. Non-Recurring Fair Value Measures The Company recently applied the fair value measurement principles to certain of its non-recurring nonfinancial assets in connection with an impairment test . The following tables presents the Company’s hierarchy for nonfinancial assets measured at fair value on a non-recurring basis (in thousands): Impairment Charges - Carrying Value Nine months ended September 30, 2017 September 30, 2017 Assets: Property and equipment, net $ 3,470,946 $ 163,364 Goodwill 85,642 351,470 Intangible assets, net 147,239 8,576 Impairment Charges - Carrying Value Nine months ended December 31, 2016 September 30, 2016 Assets: Property and equipment, net $ 3,765,393 $ — Goodwill 440,712 — Intangible assets, net 175,566 — The fair value of tangible and intangible assets is determined using a discounted cash flow approach, which is a significant unobservable input (Level 3). The Company estimates the fair value using the income approach (which is a discounted cash flow technique). These valuation methods required management to make various assumptions, including, but not limited to, future profitability, cash flows and discount rates. The Company’s estimates are based upon historical trends, management’s knowledge and experience and overall economic factors, including projections of future earnings potential. Developing discounted future cash flows in applying the income approach requires the Company to evaluate its intermediate to longer-term strategies, including, but not limited to, estimates of revenue growth, operating margins, capital requirements, inflation and working capital management. The development of appropriate rates to discount the estimated future cash flows requires the selection of risk premiums, which can materially affect the present value of future cash flows. The Company estimated the fair value of acquired tangible and intangible assets using discounted cash flow techniques that included an estimate of future cash flows, consistent with overall cash flow projections used to determine the purchase price paid to acquire the business, discounted at a rate of return that reflects the relative risk of the cash flows. The Company believes the estimates and assumptions used in the valuation methods are reasonable. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Disclosures | ( 14) Prior to the Combination on February 2, 2015, FC-GEN was wholly owned by private investors sponsored by affiliates of Formation Capital, LLC (Formation). The Company provides rehabilitation therapy services to certain facilities owned and operated by affiliates of FC-GEN’s sponsors. These services resulted in net revenue of $35.1 million and $109.1 million in the three and nine months ended September 30, 2017, respectively, as compared to net revenue of $38.1 million and $118.6 million in the three and nine months ended September 30, 2016, respectively. The services resulted in net accounts receivable balances of $83.2 million and $79.7 million at September 30, 2017 and December 31, 2016, respectively. The Company contracts with FC PAC Holdings, LLC (FC PAC) to provide hospice and diagnostic services in the normal course of business. FC PAC ownership includes affiliates of Formation, some of whom are members of the Company’s board of directors (the Board). On May 1, 2016, the Company entered into preferred provider and affiliation agreements with FC PAC. Fees for these services amounted to $3.2 million and $8.9 million in the three and nine months ended September 30, 2017, respectively, as compared to $2.9 million and $9.4 million in the three and nine months ended September 30, 2016, respectively. Effective May 1, 2016, the Company completed the sale of its hospice and home health operations to FC Compassus LLC for $72 million in cash and a $12 million interest-bearing note. Certain members of the Board indirectly beneficially hold ownership interests in FC Compassus LLC totaling less than 10% in the aggregate. The combined note and accrued interest balance of $14.1 million, net of reserves, remains outstanding at September 30, 2017. |
Asset Impairment Charges
Asset Impairment Charges | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Asset Impairment Charges | (15) Asset Impairment Charges As discussed in Note 1 – “ General Information – Going Concern Considerations ,” the Company’s results of operations have been impacted severely by the persistent pressure of healthcare reforms enacted over the past decade especially in its inpatient business. The reduction and diversion of census from the skilled nursing sector has caused the Company to enact certain cost mitigation strategies to offset the loss of organic revenue. This strategy had been successful in recent years, however, this revenue compression compounded by escalating wage inflation and professional liability losses, and combined with the increased cost of capital through escalating leases and greater debt burden, has accelerated through the third quarter of 2017 resulting in triggering events to assess for conditions of impairment. Long-Lived Assets with a Definite Useful Life The Company’s long-lived assets and identifiable intangible assets with a definite useful life were tested for impairment at the lowest levels for which there are identifiable cash flows. The Company estimated the future net undiscounted cash flows expected to be generated from the use of the long-lived assets and then compared the estimated undiscounted cash flows to the carrying amount of the long-lived assets. The cash flow period was based on the remaining useful life of the primary asset in each long-lived asset group, principally a building for owned skilled nursing facilities, a favorable lease intangible asset for certain leased facilities and customer relationship assets in the rehabilitation therapy services segment. For the three and nine months ended September 30, 2017, the Company recognized $163.4 million in impairment charges on its long-lived assets with a definite useful life. This charge is presented in long-lived asset impairments on the consolidated statements of operations. Identifiable Intangile Assets with a Definite Useful Life Management Contracts The management contract asset was derived through the organization of facilities under an upper payment limit supplemental payment program in Texas that provided supplemental Medicaid payments with federal matching funds for skilled nursing facilities that were affiliated with county-owned hospital districts. Under this program, the Company acted as the manager of the facilities and shared in the supplemental payments with the county hospitals. With the expiration of the program, the remaining unamortized asset associated with the management contract was written off. For the three and nine months ended September 30, 2017, the Company recognized $7.3 million in impairment charges on identifiable intangible assets associated with management contracts. This charge is presented in goodwill and identifiable intangible impairments on the consolidated statements of operations. Favorable Leases Favorable lease contracts represent the estimated value of future cash outflows of operating lease contracts compared to lease rates that could be negotiated in an arms-length transaction at the time of measurement. Favorable lease contracts are amortized on a straight-line basis over the lease terms. These favorable lease contracts are measured for impairment using estimated future net undiscounted cash flows expected to be generated from the use of the leased assets compared to the carrying amount of the favorable lease. The cash flow period was based on the remaining useful lives of the asset, which for favorable lease assets is the lease term. For the three and nine months ended September 30, 2017, the Company recognized $1.2 million in impairment charges on its favorable lease intangible assets with a definite useful life. This charge is presented in goodwill and identifiable intangible impairments on the consolidated statements of operations. Goodwill Adverse changes in the operating environment and related key assumptions used to determine the fair value of the Company’s reporting units and indefinite-lived intangible assets may result in future impairment charges for a portion or all of these assets. Specifically, if the rate of growth of government and commercial revenues earned by the Company’s reporting units were to be less than projected or if healthcare reforms were to negatively impact the Company’s business, an impairment charge of a portion or all of these assets may be required. An impairment charge could have a material adverse effect on the Company’s business, financial position and results of operations but would not be expected to have an impact on the Company’s cash flows or liquidity. The Company performed its annual goodwill impairment test as of September 30, 2017 and 2016. The Company conducts the test at the reporting unit level that management has determined aligns with the Company’s segment reporting. See Note 5 – “Segment Information” for a breakdown of the Company’s goodwill by segment. The Company measures the fair value of each reporting unit to determine whether the fair value exceeds the carrying value based upon the market capitalization including a control premium and a discounted cash flow analysis. Determining fair value requires the exercise of significant judgment, including judgment about appropriate discount rates, perpetual growth rates, the amount and timing of expected future cash flows, as well as relevant comparable company earnings multiples for the market-based approach. The cash flows employed in the discounted cash flow analyses are based on the Company’s internal business model for 2017 and, for years beyond 2017 the growth rates used are an estimate of the future growth in the industry in which the Company participates. The discount rates used in the discounted cash flow analyses are intended to reflect the risks inherent in the future cash flows of the reporting unit and are based on an estimated cost of capital, which was determined based on the Company’s estimated cost of capital relative to its capital structure. In addition, the market-based approach utilizes comparable company public trading values, research analyst estimates and, where available, values observed in private market transactions. The Company performed a quantitative test for impairment of goodwill to assess the impact of changes in the regulatory and reimbursement environment. The Company compares the carrying amount of each of the reporting units to the fair value of each of the reporting units. If the carrying amount of each of its reporting units exceeds its fair value, an impairment of the goodwill is required. If not, no further testing is needed. The analysis indicated that the reporting unit carrying value exceeded the fair value of our inpatient reporting unit and accordingly an impairment was necessary. An impairment of $351.5 million, which represents the entire balance of goodwill associated with the inpatient reporting unit, was recorded in the three and nine months ended September 30, 2017. This charge was presented in goodwill and identifiable intangible impairments on the consolidated statements of operations. With respect to the Company’s rehabilitation therapy services and other services segments, the total fair value exceeds the carrying value, so no impairment charge is required. Although these segments have encountered similar challenging operating environments that have so acutely impacted the Company’s inpatient segment, those challenges have not negatively impacted the operating results of these segments to the level where an impairment charge is warranted. |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events. | |
Subsequent Events | (16) Subsequent Events Restructuring Plans The Company and its counterparties to the Welltower Master Lease, the Sabra Master Leases, the Welltower Bridge Loans, the Term Loans and certain other loans have entered into preliminary non-binding agreements concerning a proposed long-term restructuring of these master leases and loans (the Restructuring Plans) in an effort to strengthen significantly the capital structure of the Company. These Restructuring Plans include the proposed sale by Sabra and Welltower of certain facilities currently leased to the Company, which the Company intends to re-lease from new third-party landlords at reduced rents. The Company will also make commercially reasonable efforts to refinance or repay through asset sales, certain of its debt obligations with Welltower which, upon completion, is expected to result in a reduction in interest costs. These Restructuring Plans, if and when fully consummated, are expected to reduce the Company’s current cash fixed charges between $80 million and $100 million annually. This level of reduction in fixed charges is subject to the successful sale of the Welltower and Sabra facilities to new landlords, the successful re-leasing of those facilities to the Company at reduced rents, the successful refinancing and/or repayment of certain debt obligations and the receipt of additional concessions to be made by other credit parties. The Company believes the transactions under the proposed restructuring could occur during the first half of 2018, however, there can be no assurance that any such transaction under the proposed Restructuring Plans will be agreed to or completed, or that any such agreements will attain a sustainable capital structure even if the Restructuring Plans are implemented. See Part II, Item 1A, “ Risk Factors .” |
General Information (Policies)
General Information (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
General Information | |
Company History | Company History Genesis Healthcare, Inc., a Delaware corporation, was incorporated in October 2005 under the name of SHG Holding Solutions, Inc., and subsequently changed its name to Skilled Healthcare Group, Inc. (Skilled). On February 2, 2015, Skilled combined its businesses and operations (the Combination) with FC-GEN Operations Investment, LLC, a Delaware limited liability company (FC-GEN), pursuant to a Purchase and Contribution Agreement dated August 18, 2014. In connection with the Combination, Skilled changed its name to Genesis Healthcare, Inc. Effective December 1, 2012, FC-GEN completed the acquisition of Sun Healthcare Group, Inc. (Sun Healthcare) and its subsidiaries. |
Description of Business | Description of Business Genesis Healthcare, Inc. is a healthcare services company that through its subsidiaries (collectively, the Company or Genesis) owns and operates skilled nursing facilities, assisted/senior living facilities and a rehabilitation therapy business. The Company has an administrative services company that provides a full complement of administrative and consultative services that allows its affiliated operators and third-party operators with whom the Company contracts to better focus on delivery of healthcare services. At September 30, 2017, the Company provides inpatient services through 472 skilled nursing, assisted/senior living and behavioral health centers located in 30 states. Revenues of the Company’s owned, leased and otherwise consolidated inpatient businesses constitute approximately 86% of its revenues. The Company provides a range of rehabilitation therapy services, including speech pathology, physical therapy, occupational therapy and respiratory therapy. These services are provided by rehabilitation therapists and assistants employed or contracted at substantially all of the centers operated by the Company, as well as by contract to healthcare facilities operated by others. Recently the Company has expanded its delivery model for providing rehabilitation services to community-based and at-home settings, as well as internationally in China. After the elimination of intercompany revenues, the rehabilitation therapy services business constitutes approximately 11% of the Company’s revenues. The Company provides an array of other specialty medical services, including management services, physician services, staffing services, and other healthcare related services, which comprise the balance of the Company’s revenues. |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). In the opinion of management, the consolidated financial statements include all necessary adjustments for a fair presentation of the financial position and results of operations for the periods presented. The consolidated financial statements of the Company include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation. The Company presents noncontrolling interests within the stockholders’ deficit section of its consolidated balance sheets. The Company presents the amount of net loss attributable to Genesis Healthcare, Inc. and net loss attributable to noncontrolling interests in its consolidated statements of operations. The consolidated financial statements include the accounts of all entities controlled by the Company through its ownership of a majority voting interest and the accounts of any variable interest entities (VIEs) where the Company is subject to a majority of the risk of loss from the VIE's activities, or entitled to receive a majority of the entity's residual returns, or both. The Company assesses the requirements related to the consolidation of VIEs, including a qualitative assessment of power and economics that considers which entity has the power to direct the activities that “most significantly impact” the VIE's economic performance and has the obligation to absorb losses of, or the right to receive benefits that could be potentially significant to, the VIE. The Company's composition of variable interest entities was not material at September 30, 2017. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q of Regulation S-X and do not include all of the disclosures normally required by U.S. GAAP or those normally required in annual reports on Form 10-K. Accordingly, these financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2016 filed with the U.S. Securities and Exchange Commission (the SEC) on Form 10-K on March 6, 2017. |
Going Concern Considerations | Going Concern Considerations The accompanying unaudited financial statements have been prepared on the basis the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In evaluating the Company’s ability to continue as a going concern, management considered the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern for 12 months following the date the Company’s financial statements were issued (November 8, 2017). Management considered the recent results of operations as well as the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows and the Company’s conditional and unconditional obligations due before November 8, 2018. The Company’s results of operations have been negatively impacted by the persistent pressure of healthcare reforms enacted in recent years. This challenging operating environment has been most acute in the Company’s inpatient segment, but also has had a detrimental effect on the Company’s rehabilitation therapy segment and its customers. In recent years, the Company has implemented a number of cost mitigation strategies to offset the negative financial implications of this challenging operating environment. These strategies have been successful in recent years, however, the negative impact of continued reductions in skilled patient admissions, shortening lengths of stay, escalating wage inflation and professional liability losses, combined with the increased cost of capital through escalating lease payments accelerated in the third quarter of 2017. These factors caused the Company to be unable to comply with certain financial covenants at September 30, 2017 under the Revolving Credit Facilities, the Term Loans, the Welltower Bridge Loans and the Master Lease Agreements and other agreements. The Company has received waivers from the parties to the Term Loans, the Welltower Bridge Loans and the Master Lease Agreements at September 30, 2017. The Company is engaged in discussions with its counterparties to the Revolving Credit Facilities to secure a 90-day forbearance agreement through late January 2018. The Company’s ability to service its financial obligations, in addition to its ability to comply with the financial and restrictive covenants contained in the major agreements and other agreements, is dependent upon, among other things, its ability to attain a sustainable capital structure and its future performance which is subject to financial, economic, competitive, regulatory and other factors. Many of these factors are beyond the Company’s control. 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. The Company and its counterparties to the Restructuring Plans, as defined in Note 16 – “ Subsequent Events – Restructuring Plans ,” have entered into these preliminary and non-binding agreements in an effort to attain a sustainable capital structure for the Company. The Company believes that it is in the best interest of all creditors to grant necessary waivers or reach negotiated settlements to enable the Company to continue as a going concern while it works with its counterparties to the Restructuring Plans to strengthen significantly its capital structure. However, there can be no assurance that timely and adequate waivers will be received in future periods or such settlements reached. If future defaults are not cured within applicable cure periods, if any, and if waivers or other forms of relief are not timely obtained, the defaults can cause acceleration of the Company’s financial obligations under certain of its agreements, which the Company may not be in a position to satisfy. Accordingly, the Company has classified the obligations of the effected agreements as current liabilities in its consolidated balance sheets as of September 30, 2017. In the event of a failure to obtain necessary and timely waivers or otherwise achieve the fixed charge reductions contained in the Restructuring Plans, the Company may be forced to seek reorganization under the U.S. Bankruptcy Code. See Part II. Item 1A, “ Risk Factors .” The existence of these factors raises substantial doubt about the Company’s ability to continue as a going concern. |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (the FASB) issued Accounting Standards Update (ASU) No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09), which is intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The Company adopted ASU 2016-09 effective January 1, 2017. Its adoption had no material impact on the Company’s consolidated financial condition and results of operations. In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (350): Simplifying the Test for Goodwill Impairment (ASU 2017-04), which serves to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The adoption of ASU 2017-04 is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted ASU 2017-04 when it performed its annual goodwill impairment test at September 30, 2017 . The adoption of ASU 2017-04 eliminated Step 2 of the goodwill impairment test. See Note 15 – “Asset Impairment Charges.” Recently Issued Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), which serves to supersede most existing revenue recognition guidance, including guidance specific to the healthcare industry. The FASB later issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606) – Principal versus Agent Considerations , in March 2016, ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing , in April 2016, ASU 2016-12, Revenue from Contracts with Customers (Topic 606) – Narrow-Scope Improvements and Practical Expedients , in May 2016, and ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers , in December 2016, all of which further clarified aspects of Topic 606. The standard provides a principles-based framework for recognizing revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and requires enhanced disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The ASU will be effective for annual and interim reporting periods beginning after December 15, 2017. The standard may be applied retrospectively to each period presented (full retrospective method) or retrospectively with the cumulative effect recognized in beginning retained earnings as of the date of adoption (modified retrospective method). The Company will adopt the requirements of this standard effective January 1, 2018 using the modified retrospective method. A cross-functional implementation team has been established consisting of representatives from all of our operating segments. The implementation team is working to analyze the impact of the standard on the Company’s contract portfolio by reviewing current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to revenue contracts. In addition, the Company is in the process of identifying and implementing the appropriate changes to business processes and controls to support recognition and disclosure under the new standard. The Company expects to apply the portfolio approach practical expedient and is in the process of reviewing its revenue sources and evaluating the appropriate distribution of patient accounts into portfolios with similar collection experience that, when evaluated for collectibility, will result in a materially consistent revenue amount for such portfolios as if each patient account was evaluated on an individual contract basis. The Company is also evaluating the existence of variable consideration in the form of various reimbursement programs, such as bundled payment initiatives, which could have an impact on the revenue recognized. The Company expects that the adoption of the new standard will impact amounts presented in certain categories on its consolidated statements of operations, as upon adoption, certain amounts currently classified as bad debt expense may be reflected as implicit price concessions, and therefore an adjustment to net revenues. The Company is still evaluating the impact of the standard on its consolidated financial position, results of operations and cash flows. The Company is actively monitoring various industry publications, which continue to evolve. As such, any conclusions reached in the final industry guidance that are inconsistent with the Company's current assessment could result in revisions to the Company's expectations regarding the new standard’s impact on its consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01), which is intended to improve the recognition and measurement of financial instruments. The new guidance requires equity investments be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values; eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value; and requires separate presentation of financial assets and financial liabilities by measurement category. The new guidance is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted under certain circumstances. The Company does not expect the adoption of ASU 2016-01 to have a material impact on its consolidated financial condition and results of operations. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02), which amended authoritative guidance on accounting for leases. The new provisions require that a lessee of operating leases recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The lease liability will be equal to the present value of lease payments, with the right-of-use asset based upon the lease liability. The classification criteria for distinguishing between finance (or capital) leases and operating leases are substantially similar to the previous lease guidance, but with no explicit bright lines. As such, operating leases will result in straight-line rent expense similar to current practice. For short term leases (term of 12 months or less), a lessee is permitted to make an accounting election not to recognize lease assets and lease liabilities, which would generally result in lease expense being recognized on a straight-line basis over the lease term. The guidance is effective for annual and interim periods beginning after December 15, 2018, and will require application of the new guidance at the beginning of the earliest comparable period presented. Early adoption is permitted. ASU 2016-02 must be adopted using a modified retrospective transition. The adoption of ASU 2016-02 is expected to have a material impact on the Company’s financial position. The Company is still evaluating the impact on its results of operations and does not expect the adoption of this standard to have an impact on liquidity. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15), which addresses how certain cash receipts and cash payments should be presented and classified in the statement of cash flows. The new guidance is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted. The adoption of ASU 2016-15 is not expected to have a material impact on the Company’s consolidated statements of cash flows. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (230): Restricted Cash (ASU 2016-18), which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The adoption of ASU 2016-18 is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted, including adoption in an interim period. The adoption of ASU 2016-18 is not expected to have a material impact on the Company’s consolidated statements of cash flows. In January 2017, the FASB issued ASU No. 2017-01, Business Combination (805): Clarifying the Definition of a Business (ASU 2017-01), which provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The adoption of ASU 2017-01 is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted in certain circumstances. The Company does not expect the adoption of ASU 2017-01 to have a material impact on its consolidated financial condition and results of operations. |
Certain Significant Risks and24
Certain Significant Risks and Uncertainties (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Certain Significant Risks and Uncertainties | |
Schedule of Revenue by Source | Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Medicare 22 % 24 % 23 % 25 % Medicaid 57 % 55 % 56 % 54 % Insurance 12 % 11 % 12 % 11 % Private and other 9 % 10 % 9 % 10 % Total 100 % 100 % 100 % 100 % |
Loss Per Share (Tables)
Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Loss Per Share | |
Reconciliation of the Numerator and Denominator Used in the Calculation of Net Income per Share (in thousands, except per share data) | Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Numerator: Loss from continuing operations $ (615,022) $ (52,355) $ (804,117) $ (159,364) Less: Net loss attributable to noncontrolling interests (241,200) (31,921) (314,446) (72,895) Loss from continuing operations attributable to Genesis Healthcare, Inc. $ (373,822) $ (20,434) $ (489,671) $ (86,469) Loss from discontinued operations, net of taxes (2) (24) (70) (1) Net loss attributable to Genesis Healthcare, Inc. $ (373,824) $ (20,458) $ (489,741) $ (86,470) Denominator: Weighted-average shares outstanding for basic and diluted net loss per share 94,940 90,226 93,376 89,617 Basic and diluted net loss per common share: Loss from continuing operations attributable to Genesis Healthcare, Inc. $ (3.94) $ (0.23) $ (5.24) $ (0.96) Loss from discontinued operations, net of taxes (0.00) (0.00) (0.00) (0.00) Net loss attributable to Genesis Healthcare, Inc. $ (3.94) $ (0.23) $ (5.24) $ (0.96) |
Schedule of Anti-dilutive Securities (in thousands) | Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Net loss Net loss Net loss Net loss attributable to attributable to attributable to attributable to Genesis Anti-dilutive Genesis Anti-dilutive Genesis Anti-dilutive Genesis Anti-dilutive Healthcare, Inc. shares Healthcare, Inc. shares Healthcare, Inc. shares Healthcare, Inc. shares Exchange of restricted stock units of noncontrolling interests $ (242,806) 61,692 $ (26,959) 64,391 $ (319,784) 62,108 $ (58,465) 64,437 Employee and director unvested restricted stock units — 40 — — — 988 — — Convertible note 113 3,000 — — 335 3,000 — — |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Information | |
Summary of Segmented Revenues | Three months ended September 30, 2017 2016 Increase / (Decrease) Revenue Revenue Revenue Revenue Dollars Percentage Dollars Percentage Dollars Percentage Revenues: Inpatient services: Skilled nursing facilities $ 1,103,554 83.8 % $ 1,192,498 84.0 % $ (88,944) (7.5) % Assisted/Senior living facilities 24,185 1.8 % 29,423 2.1 % (5,238) (17.8) % Administration of third party facilities 2,266 0.2 % 2,659 0.2 % (393) (14.8) % Elimination of administrative services (370) — % (340) — % (30) 8.8 % Inpatient services, net 1,129,635 85.8 % 1,224,240 86.3 % (94,605) (7.7) % Rehabilitation therapy services: Total therapy services 244,471 18.6 % 261,543 18.4 % (17,072) (6.5) % Elimination intersegment rehabilitation therapy services (92,573) (7.0) % (101,156) (7.1) % 8,583 (8.5) % Third party rehabilitation therapy services 151,898 11.6 % 160,387 11.3 % (8,489) (5.3) % Other services: Total other services 42,901 3.3 % 40,376 2.8 % 2,525 6.3 % Elimination intersegment other services (8,982) (0.7) % (6,009) (0.4) % (2,973) 49.5 % Third party other services 33,919 2.6 % 34,367 2.4 % (448) (1.3) % Net revenues $ 1,315,452 100.0 % $ 1,418,994 100.0 % $ (103,542) (7.3) % Nine months ended September 30, 2017 2016 Increase / (Decrease) Revenue Revenue Revenue Revenue Dollars Percentage Dollars Percentage Dollars Percentage Revenues: Inpatient services: Skilled nursing facilities $ 3,404,181 84.0 % $ 3,595,258 82.9 % $ (191,077) (5.3) % Assisted/Senior living facilities 72,262 1.8 % 90,772 2.1 % (18,510) (20.4) % Administration of third party facilities 6,841 0.2 % 8,608 0.2 % (1,767) (20.5) % Elimination of administrative services (1,139) — % (1,077) — % (62) 5.8 % Inpatient services, net 3,482,145 86.0 % 3,693,561 85.2 % (211,416) (5.7) % Rehabilitation therapy services: Total therapy services 743,605 18.4 % 821,704 19.1 % (78,099) (9.5) % Elimination intersegment rehabilitation therapy services (287,599) (7.1) % (311,060) (7.2) % 23,461 (7.5) % Third party rehabilitation therapy services 456,006 11.3 % 510,644 11.9 % (54,638) (10.7) % Other services: Total other services 133,168 3.3 % 142,336 3.3 % (9,168) (6.4) % Elimination intersegment other services (25,459) (0.6) % (16,971) (0.4) % (8,488) 50.0 % Third party other services 107,709 2.7 % 125,365 2.9 % (17,656) (14.1) % Net revenues $ 4,045,860 100.0 % $ 4,329,570 100.0 % $ (283,710) (6.6) % |
Summaries of Condensed Consolidated Statements of Operations, Total Assets and Goodwill | Three months ended September 30, 2017 Rehabilitation Inpatient Therapy Other Services Services Services Corporate Eliminations Consolidated Net revenues $ 1,130,005 $ 244,471 $ 42,778 $ 123 $ (101,925) $ 1,315,452 Salaries, wages and benefits 507,075 205,232 27,097 — — 739,404 Other operating expenses 442,816 19,455 15,242 — (101,926) 375,587 General and administrative costs — — — 40,732 — 40,732 Provision for losses on accounts receivable 22,078 1,974 447 688 — 25,187 Lease expense 37,895 (14) 302 487 — 38,670 Depreciation and amortization expense 51,666 3,497 167 4,060 — 59,390 Interest expense 103,306 14 9 21,102 — 124,431 Investment income — — — (1,596) — (1,596) Other loss 2,379 — — — — 2,379 Transaction costs — — — 1,056 — 1,056 Customer receivership — 297 — — — 297 Long-lived asset impairments 161,483 1,881 — — — 163,364 Goodwill and identifiable intangible asset impairments 360,046 — — — — 360,046 Equity in net (income) loss of unconsolidated affiliates — — — (571) 502 (69) (Loss) income before income tax benefit (558,739) 12,135 (486) (65,835) (501) (613,426) Income tax expense — — — 1,596 — 1,596 (Loss) income from continuing operations $ (558,739) $ 12,135 $ (486) $ (67,431) $ (501) $ (615,022) Three months ended September 30, 2016 Rehabilitation Inpatient Therapy Other Services Services Services Corporate Eliminations Consolidated Net revenues $ 1,224,580 $ 261,543 $ 40,226 $ 150 $ (107,505) $ 1,418,994 Salaries, wages and benefits 586,654 219,864 27,896 — — 834,414 Other operating expenses 428,820 18,903 10,610 — (107,505) 350,828 General and administrative costs — — — 46,545 — 46,545 Provision for losses on accounts receivable 21,088 4,722 (161) (47) — 25,602 Lease expense 34,745 24 269 474 — 35,512 Depreciation and amortization expense 53,313 2,943 163 4,685 — 61,104 Interest expense 109,339 14 10 22,449 — 131,812 Loss on extinguishment of debt — — — 15,363 — 15,363 Investment income — — — (934) — (934) Other income (4,991) — (182) — — (5,173) Transaction costs — — — 3,057 — 3,057 Equity in net (income) loss of unconsolidated affiliates — — — (1,608) 715 (893) (Loss) income before income tax benefit (4,388) 15,073 1,621 (89,834) (715) (78,243) Income tax benefit — — — (25,888) — (25,888) (Loss) income from continuing operations $ (4,388) $ 15,073 $ 1,621 $ (63,946) $ (715) $ (52,355) Nine months ended September 30, 2017 Rehabilitation Inpatient Therapy Other Services Services Services Corporate Eliminations Consolidated Net revenues $ 3,483,284 $ 743,605 $ 132,718 $ 450 $ (314,197) $ 4,045,860 Salaries, wages and benefits 1,597,007 619,928 86,365 — — 2,303,300 Other operating expenses 1,303,448 56,433 44,456 — (314,198) 1,090,139 General and administrative costs — — — 127,041 — 127,041 Provision for losses on accounts receivable 62,448 8,641 995 616 — 72,700 Lease expense 110,661 — 897 1,446 — 113,004 Depreciation and amortization expense 159,483 11,110 506 12,887 — 183,986 Interest expense 309,948 42 28 63,455 — 373,473 Loss on extinguishment of debt — — — 2,301 — 2,301 Investment income — — — (4,097) — (4,097) Other loss 15,112 732 — (242) — 15,602 Transaction costs — — — 7,862 — 7,862 Customer receivership — 35,864 — — — 35,864 Long-lived asset impairments 161,483 1,881 — — — 163,364 Goodwill and identifiable intangible asset impairments 360,046 — — — — 360,046 Equity in net (income) loss of unconsolidated affiliates — — — (1,702) 1,411 (291) (Loss) income before income tax benefit (596,352) 8,974 (529) (209,117) (1,410) (798,434) Income tax expense — — — 5,683 — 5,683 (Loss) income from continuing operations $ (596,352) $ 8,974 $ (529) $ (214,800) $ (1,410) $ (804,117) Nine months ended September 30, 2016 Rehabilitation Inpatient Therapy Other Services Services Services Corporate Eliminations Consolidated Net revenues $ 3,694,638 $ 821,704 $ 141,970 $ 366 $ (329,108) $ 4,329,570 Salaries, wages and benefits 1,748,232 689,833 96,759 — — 2,534,824 Other operating expenses 1,296,069 58,927 36,198 — (329,108) 1,062,086 General and administrative costs — — — 139,999 — 139,999 Provision for losses on accounts receivable 68,757 12,165 993 (139) — 81,776 Lease expense 107,047 71 1,209 1,469 — 109,796 Depreciation and amortization expense 167,208 9,137 805 13,672 — 190,822 Interest expense 328,385 43 30 72,395 — 400,853 Loss on extinguishment of debt — — — 15,830 — 15,830 Investment income — — — (2,073) — (2,073) Other income (4,119) — (43,965) — — (48,084) Transaction costs — — — 9,804 — 9,804 Skilled Healthcare and other loss contingency expense — — — 15,192 — 15,192 Equity in net (income) loss of unconsolidated affiliates — — — (3,894) 1,741 (2,153) (Loss) income before income tax expense (16,941) 51,528 49,941 (261,889) (1,741) (179,102) Income tax benefit — — — (19,738) — (19,738) (Loss) income from continuing operations $ (16,941) $ 51,528 $ 49,941 $ (242,151) $ (1,741) $ (159,364) The following table presents the segment assets as of September 30, 2017 compared to December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Inpatient services $ 4,376,132 $ 5,194,811 Rehabilitation therapy services 411,195 454,723 Other services 52,236 67,348 Corporate and eliminations 87,365 62,319 Total assets $ 4,926,928 $ 5,779,201 The following table presents segment goodwill as of September 30, 2017 compared to December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Inpatient services $ — $ 355,070 Rehabilitation therapy services 73,814 73,814 Other services 11,828 11,828 Total goodwill $ 85,642 $ 440,712 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment (in thousands) | September 30, 2017 December 31, 2016 Land, buildings and improvements $ 604,985 $ 673,092 Capital lease land, buildings and improvements 745,245 818,273 Financing obligation land, buildings and improvements 2,522,415 2,584,178 Equipment, furniture and fixtures 456,990 447,767 Construction in progress 22,360 49,859 Gross property and equipment 4,351,995 4,573,169 Less: accumulated depreciation (881,049) (807,776) Net property and equipment $ 3,470,946 $ 3,765,393 |
Goodwill and Identifiable Int28
Goodwill and Identifiable Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Carrying Value of Goodwill (in thousands) | The changes in the carrying value of goodwill are as follows (in thousands): Total Balance at December 31, 2016 $ 440,712 Goodwill disposal associated with inpatient divestitures (3,600) Goodwill impairment associated with inpatient segment (351,470) Balance at September 30, 2017 $ 85,642 |
Schedule of identifiable intangible assets (in thousands) | Identifiable intangible assets consist of the following at September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 Weighted Average Remaining Life (Years) Customer relationship assets, net of accumulated amortization of $52,667 $ 60,166 8 Favorable leases, net of accumulated amortization of $31,406 36,517 10 Trade names 50,556 Indefinite Identifiable intangible assets $ 147,239 December 31, 2016 Weighted Average Remaining Life (Years) Customer relationship assets, net of accumulated amortization of $43,862 $ 67,348 9 Management contracts, net of accumulated amortization of $17,872 14,651 2 Favorable leases, net of accumulated amortization of $29,421 43,011 10 Trade names 50,556 Indefinite Identifiable intangible assets $ 175,566 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Long-Term Debt Abstract | |
Schedule of Long-term Debt (in thousands) | September 30, 2017 December 31, 2016 Revolving credit facilities, net of debt issuance costs of $9,952 at September 30, 2017 and $9,220 at December 31, 2016 $ 351,247 $ 383,630 Term loan agreement, net of debt issuance costs of $3,312 at September 30, 2017 and $3,859 at December 31, 2016 116,290 116,174 Real estate bridge loans, net of debt issuance costs of $3,710 at September 30, 2017 and $4,400 at December 31, 2016 289,120 313,549 HUD insured loans, net of debt issuance costs of $5,396 at September 30, 2017 and $4,773 at December 31, 2016 261,370 241,570 Notes payable, net of convertible debt discount of $842 at September 30, 2017 and $990 at December 31, 2016 76,337 73,829 Mortgages and other secured debt (recourse) 12,711 13,235 Mortgages and other secured debt (non-recourse), net of debt issuance costs of $121 at September 30, 2017 and $131 at December 31, 2016 28,283 29,157 1,135,358 1,171,144 Less: Current installments of long-term debt (851,344) (24,594) Long-term debt $ 284,014 $ 1,146,550 |
Schedule of Borrowings and Interest Rates (dollars in thousands) | Weighted Average Revolving Credit Facilities Commitment Borrowings Interest Tranche A-1 $ 440,000 $ 300,000 5.14 % Tranche A-2 50,000 35,800 4.74 % HUD tranche 35,000 25,400 4.50 % $ 525,000 $ 361,200 5.06 % |
Schedule of Maturity of Total Debt (in thousands) | Twelve months ended September 30, 2018 $ 28,372 2019 17,584 2020 486,141 2021 59,069 2022 313,491 Thereafter 238,686 Total debt maturity $ 1,143,343 |
Leases and Lease Commitments (T
Leases and Lease Commitments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Leases and Lease Commitments | |
Schedule of Future Minimum Capital and Operating Lease Payments (in thousands) | Twelve months ended September 30, Capital Leases Operating Leases 2018 $ 90,425 $ 142,646 2019 93,333 139,688 2020 92,453 139,419 2021 94,561 135,437 2022 96,755 112,149 Thereafter 2,967,233 227,737 Total future minimum lease payments 3,434,760 $ 897,076 Less amount representing interest (2,439,736) Capital lease obligation 995,024 Less current portion (949,050) Long-term capital lease obligation $ 45,974 |
Financing Obligation (Tables)
Financing Obligation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Financing Obligation | |
Schedule of Future Minimum Financing Lease Payments (in thousands) | Twelve months ended September 30, 2018 $ 275,150 2019 281,193 2020 287,838 2021 294,677 2022 292,964 Thereafter 7,929,586 Total future minimum lease payments 9,361,408 Less amount representing interest (6,444,677) Financing obligations $ 2,916,731 Less current portion (2,908,020) Long-term financing obligations $ 8,711 |
Fair Value of Financial Instr32
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value of Financial Instruments | |
Schedule of Fair Value of Assets Measured on a Recurring Basis (in thousands) | The tables below present the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands): Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Active Markets for Significant Other Unobservable September 30, Identical Assets Observable Inputs Inputs Assets: 2017 (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ 50,591 $ 50,591 $ — $ — Restricted cash and equivalents 16,018 16,018 — — Restricted investments in marketable securities 124,358 124,358 — — Total $ 190,967 $ 190,967 $ — $ — Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Active Markets for Significant Other Unobservable December 31, Identical Assets Observable Inputs Inputs Assets: 2016 (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ 51,408 $ 51,408 $ — $ — Restricted cash and equivalents 12,052 12,052 — — Restricted investments in marketable securities 143,974 143,974 — — Total $ 207,434 $ 207,434 $ — $ — |
Schedule of Carrying Amounts and Estimated Fair Values of Long-term Debt Instruments | September 30, 2017 December 31, 2016 Carrying Value Fair Value Carrying Value Fair Value Revolving credit facilities $ 351,247 $ 351,247 $ 383,630 $ 383,630 Term loan agreement 116,290 116,290 116,174 116,174 Real estate bridge loans 289,120 289,120 313,549 313,549 HUD insured loans 261,370 248,185 241,570 226,983 Notes payable 76,337 76,337 73,829 73,829 Mortgages and other secured debt (recourse) 12,711 12,711 13,235 13,235 Mortgages and other secured debt (non-recourse) 28,283 28,283 29,157 29,157 $ 1,135,358 $ 1,122,173 $ 1,171,144 $ 1,156,557 |
Schedule of Hierarchy of Nonfinancial Assets Measured at Fair Value on a Nonrecurring Basis (in thousands) | Impairment Charges - Carrying Value Nine months ended September 30, 2017 September 30, 2017 Assets: Property and equipment, net $ 3,470,946 $ 163,364 Goodwill 85,642 351,470 Intangible assets, net 147,239 8,576 Impairment Charges - Carrying Value Nine months ended December 31, 2016 September 30, 2016 Assets: Property and equipment, net $ 3,765,393 $ — Goodwill 440,712 — Intangible assets, net 175,566 — |
General Information (Details)
General Information (Details) | 9 Months Ended |
Sep. 30, 2017statefacility | |
Going concern | |
Term Of Forbearance Agreement | 90 days |
Inpatient Services | |
Facility Count | |
Number of skilled nursing, assisted/senior living and behavioral health centers through which inpatient services are provided | facility | 472 |
Number of states with facilities | state | 30 |
Certain Significant Risks and34
Certain Significant Risks and Uncertainties (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($)facility | Jul. 31, 2017statefacility | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)customer | Sep. 30, 2016USD ($) | |
Concentration Risk | ||||||
Concentration risk (as a percent) | 100.00% | 100.00% | 100.00% | 100.00% | ||
Customer receivership | $ 297 | $ 35,864 | ||||
Net revenues | 1,315,452 | $ 1,418,994 | 4,045,860 | $ 4,329,570 | ||
(Loss) income from continuing operations | (615,022) | (52,355) | (804,117) | (159,364) | ||
Inpatient Services | ||||||
Concentration Risk | ||||||
Net revenues | 1,129,635 | 1,224,240 | 3,482,145 | 3,693,561 | ||
Rehabilitation therapy service | ||||||
Concentration Risk | ||||||
Net revenues | $ 151,898 | $ 160,387 | $ 456,006 | $ 510,644 | ||
Medicare | ||||||
Concentration Risk | ||||||
Concentration risk (as a percent) | 22.00% | 24.00% | 23.00% | 25.00% | ||
Medicaid | ||||||
Concentration Risk | ||||||
Concentration risk (as a percent) | 57.00% | 55.00% | 56.00% | 54.00% | ||
Insurance | ||||||
Concentration Risk | ||||||
Concentration risk (as a percent) | 12.00% | 11.00% | 12.00% | 11.00% | ||
Private and Other | ||||||
Concentration Risk | ||||||
Concentration risk (as a percent) | 9.00% | 10.00% | 9.00% | 10.00% | ||
Minimum | Rehabilitation therapy service | ||||||
Concentration Risk | ||||||
Number of distinct customers | customer | 200 | |||||
One Related Party Customer Rehabilitation Services | Affiliated Entity [Member] | Rehabilitation therapy service | ||||||
Concentration Risk | ||||||
Number of customers representing approximately 42% of the outstanding receivables | customer | 1 | |||||
Accounts Receivable, Net | $ 83,200 | $ 83,200 | $ 83,200 | |||
Three Largest Customers Rehabilitation Services | Rehabilitation therapy service | ||||||
Concentration Risk | ||||||
Number of largest customers representing approximately 66% of the outstanding receivables | customer | 4 | |||||
Accounts Receivable, Net | $ 108,700 | 108,700 | $ 108,700 | |||
Customer In Receivership | Rehabilitation therapy service | ||||||
Concentration Risk | ||||||
Number of skilled nursing facilities operated by a customer | facility | 65 | |||||
Number of states in which customer operated skilled nursing facilities at time of receivership filing | state | 6 | |||||
Customer receivership | 35,600 | |||||
Net revenues | 8,800 | $ 9,500 | 27,600 | $ 29,800 | ||
(Loss) income from continuing operations | $ 1,200 | $ 1,400 | $ 4,200 | $ 5,100 | ||
Customer two in receivership | Rehabilitation therapy service | ||||||
Concentration Risk | ||||||
Number of skilled nursing facilities operated by a customer | facility | 1 | |||||
Customer receivership | $ 300 | |||||
Government contracts | Revenue | Medicare and Medicaid | Inpatient Services | ||||||
Concentration Risk | ||||||
Concentration risk (as a percent) | 79.00% | |||||
Product Concentration Risk | One Related Party Customer Rehabilitation Services | Affiliated Entity [Member] | Rehabilitation therapy service | ||||||
Concentration Risk | ||||||
Concentration risk (as a percent) | 52.00% | |||||
Product Concentration Risk | Three Largest Customers Rehabilitation Services | Rehabilitation therapy service | ||||||
Concentration Risk | ||||||
Concentration risk (as a percent) | 67.00% |
Significant Transactions and 35
Significant Transactions and Events - Divestitures (Details) $ in Thousands | Sep. 28, 2017USD ($)facility | Jul. 10, 2017USD ($)facility | Jun. 01, 2017USD ($)facility | Apr. 01, 2017USD ($)facility | Mar. 14, 2017USD ($)facilityitem | Feb. 01, 2017USD ($)item | Nov. 01, 2016item | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)facility | Sep. 30, 2016USD ($) |
Skilled Nursing Facility Divestitures | |||||||||||
Number of facilities divested or closed | facility | 28 | ||||||||||
Number Of Facilities Sold | 64 | 9 | |||||||||
Annual revenue | $ 1,315,452 | $ 1,418,994 | $ 4,045,860 | $ 4,329,570 | |||||||
Other Nonoperating Income (Expense) | (2,379) | 5,173 | (15,602) | 48,084 | |||||||
Pre-tax net income (loss) | $ (613,426) | $ (78,243) | (798,434) | $ (179,102) | |||||||
Write-down | 14,900 | ||||||||||
Number of facilities subleased | facility | 1 | ||||||||||
California | Disposed by sale | Skilled Nursing Facilities | |||||||||||
Skilled Nursing Facility Divestitures | |||||||||||
Number Of Facilities Sold | facility | 1 | ||||||||||
Annual revenue | $ 6,900 | ||||||||||
Pre-tax net income (loss) | 1,600 | ||||||||||
Loss recognized in disposal group | $ (500) | ||||||||||
Colorado | Disposed by sale | Skilled Nursing Facilities | |||||||||||
Skilled Nursing Facility Divestitures | |||||||||||
Number Of Facilities Sold | facility | 1 | ||||||||||
Annual revenue | $ 5,700 | ||||||||||
Pre-tax net income (loss) | 2,200 | ||||||||||
Loss recognized in disposal group | $ (500) | ||||||||||
North Carolina | Disposed by sale | Skilled Nursing Facilities | |||||||||||
Skilled Nursing Facility Divestitures | |||||||||||
Number Of Facilities Sold | facility | 1 | ||||||||||
Annual revenue | $ 6,400 | ||||||||||
Pre-tax net income (loss) | (1,000) | ||||||||||
Loss recognized in disposal group | $ (500) | ||||||||||
Kansas Missouri Nebraska And Iowa | Disposed by sale | Skilled Nursing Facilities | |||||||||||
Skilled Nursing Facility Divestitures | |||||||||||
Number Of Facilities Sold | facility | 18 | ||||||||||
Annual revenue | $ 110,100 | ||||||||||
Pre-tax net income (loss) | $ (10,700) | ||||||||||
Number of owned facilities | facility | 16 | ||||||||||
Number of facilities under lease | facility | 2 | ||||||||||
Total assets | $ 91,600 | ||||||||||
Cash proceeds | $ 80,000 | ||||||||||
Tennessee | Disposed by sale | Skilled Nursing Facilities | |||||||||||
Skilled Nursing Facility Divestitures | |||||||||||
Number Of Facilities Sold | facility | 1 | ||||||||||
Annual revenue | $ 7,400 | ||||||||||
Pre-tax net income (loss) | $ 500 | ||||||||||
Loss recognized in disposal group | (700) | ||||||||||
Massachusetts | Disposed by sale | Skilled Nursing Facilities | |||||||||||
Skilled Nursing Facility Divestitures | |||||||||||
Number Of Facilities Sold | facility | 4 | ||||||||||
Annual revenue | $ 26,700 | ||||||||||
Pre-tax net income (loss) | 1,200 | ||||||||||
Loss recognized in disposal group | $ (1,400) | ||||||||||
Number of facilities under lease | item | 2 | ||||||||||
Write-down | $ 14,900 | ||||||||||
Annual rent credit | $ 1,200 | ||||||||||
Georgia | Disposed by sale | Skilled Nursing Facilities | |||||||||||
Skilled Nursing Facility Divestitures | |||||||||||
Number Of Facilities Sold | item | 2 | ||||||||||
Annual revenue | $ 10,600 | ||||||||||
Pre-tax net income (loss) | (400) | ||||||||||
Loss recognized in disposal group | $ (500) | ||||||||||
Other loss | |||||||||||
Skilled Nursing Facility Divestitures | |||||||||||
Loss associated with a cease use asset | 4,100 | ||||||||||
Other loss | Disposed by sale | Skilled Nursing Facilities | |||||||||||
Skilled Nursing Facility Divestitures | |||||||||||
Loss recognized in disposal group | $ (6,300) |
Significant Transactions and 36
Significant Transactions and Events - HUD Financings (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017USD ($)facility | Sep. 30, 2016USD ($) | |
HUD Financings | ||
Proceeds from Issuance of Long-term Debt | $ 23,872 | $ 354,137 |
HUD insured loans | ||
HUD Financings | ||
Number of facilities financed by HUD | facility | 3 | |
Proceeds from Issuance of Long-term Debt | $ 23,900 | |
Real estate bridge loan | HUD insured loans | ||
HUD Financings | ||
Repayments of Debt | $ 25,100 |
Loss Per Share - Calculation of
Loss Per Share - Calculation of Basic (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($)$ / sharesshares | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2017USD ($)class$ / sharesshares | Sep. 30, 2016USD ($)$ / sharesshares | |
Income Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Number of classes of common stock | class | 3 | |||
Numerator: | ||||
Loss from continuing operations | $ (615,022) | $ (52,355) | $ (804,117) | $ (159,364) |
Less: Net loss attributable to noncontrolling interests | (241,200) | (31,921) | (314,446) | (72,895) |
Loss from continuing operations attributable to Genesis Healthcare, Inc. | (373,822) | (20,434) | (489,671) | (86,469) |
Loss from discontinued operations, net of taxes | (2) | (24) | (70) | (1) |
Net loss attributable to Genesis Healthcare, Inc | $ (373,824) | $ (20,458) | $ (489,741) | $ (86,470) |
Basic and diluted net loss per common share: | ||||
Weighted-average shares outstanding for basic and diluted net loss per share | shares | 94,940 | 90,226 | 93,376 | 89,617 |
Loss from continuing operations attributable to Genesis Healthcare, Inc. | $ / shares | $ (3.94) | $ (0.23) | $ (5.24) | $ (0.96) |
Loss from discontinued operations, net of taxes | $ / shares | 0 | 0 | 0 | 0 |
Net loss attributable to Genesis Healthcare, Inc. | $ / shares | $ (3.94) | $ (0.23) | $ (5.24) | $ (0.96) |
Class C Common Stock | ||||
Income Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Voting ratio | 1 | |||
Number of classes of stock that share voting ratio | class | 2 |
Loss Per Share - Antidilutive S
Loss Per Share - Antidilutive Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Restricted Stock Units (RSUs) | Noncontrolling interests | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Net loss attributable to Genesis Healthcare, Inc. | $ (242,806) | $ (26,959) | $ (319,784) | $ (58,465) |
Antidilutive shares | 61,692,000 | 64,391,000 | 62,108,000 | 64,437,000 |
Class A Common Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Incremental Class A stock attributable to conversion of noncontrolling interest | 10,726 | |||
Class C Common Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Number of units attributed to the noncontrolling interests outstanding | 61,600,511 | |||
Convertible Debt Securities [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Net loss attributable to Genesis Healthcare, Inc. | $ 113 | $ 335 | ||
Antidilutive shares | 3,000,000 | 3,000,000 | ||
Employee And Non-employee Director | Restricted Stock Units (RSUs) | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares | 40,000 | 988,000 |
Segment Information - Segment R
Segment Information - Segment Reporting (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)segment | Sep. 30, 2016USD ($) | |
Segment Reporting Information | ||||
Number of Reportable Segments | segment | 3 | |||
Net revenues | $ 1,315,452,000 | $ 1,418,994,000 | $ 4,045,860,000 | $ 4,329,570,000 |
Concentration Risk, Percentage | 100.00% | 100.00% | 100.00% | 100.00% |
Increase (Decrease) in Net Revenue From Prior Period | $ (103,542,000) | $ (283,710,000) | ||
Salaries, wages and benefits | 739,404,000 | $ 834,414,000 | 2,303,300,000 | $ 2,534,824,000 |
Other operating expenses | 375,587,000 | 350,828,000 | 1,090,139,000 | 1,062,086,000 |
General and administrative costs | 40,732,000 | 46,545,000 | 127,041,000 | 139,999,000 |
Provision for losses on accounts receivable | 25,187,000 | 25,602,000 | 72,700,000 | 81,776,000 |
Lease expense | 38,670,000 | 35,512,000 | 113,004,000 | 109,796,000 |
Depreciation and amortization expense | 59,390,000 | 61,104,000 | 183,986,000 | 190,822,000 |
Interest expense | 124,431,000 | 131,812,000 | 373,473,000 | 400,853,000 |
Loss on early extinguishment of debt | 15,363,000 | 2,301,000 | 15,830,000 | |
Investment income | (1,596,000) | (934,000) | (4,097,000) | (2,073,000) |
Other loss (income) | 2,379,000 | (5,173,000) | 15,602,000 | (48,084,000) |
Transaction costs | 1,056,000 | 3,057,000 | 7,862,000 | 9,804,000 |
Customer receivership | 297,000 | 35,864,000 | ||
Long-lived asset impairments | 163,364,000 | 163,364,000 | ||
Goodwill and identifiable intangible asset impairments | 360,046,000 | 360,046,000 | ||
Skilled Healthcare and other loss contingency expense | 15,192,000 | |||
Equity in net income of unconsolidated affiliates | (69,000) | (893,000) | (291,000) | (2,153,000) |
(Loss) income before income tax benefit | (613,426,000) | (78,243,000) | (798,434,000) | (179,102,000) |
Income tax expense (benefit) | 1,596,000 | (25,888,000) | 5,683,000 | (19,738,000) |
(Loss) income from continuing operations | (615,022,000) | (52,355,000) | $ (804,117,000) | $ (159,364,000) |
Product Concentration Risk | Sales Revenue, Net [Member] | ||||
Segment Reporting Information | ||||
Net revenues | $ 100 | 100 | ||
Concentration Risk, Percentage | 100.00% | 100.00% | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (7.30%) | (6.60%) | ||
Inpatient Services | ||||
Segment Reporting Information | ||||
Net revenues | $ 1,129,635,000 | $ 1,224,240,000 | $ 3,482,145,000 | $ 3,693,561,000 |
Increase (Decrease) in Net Revenue From Prior Period | $ (94,605,000) | $ (211,416,000) | ||
Inpatient Services | Product Concentration Risk | Sales Revenue, Net [Member] | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 85.80% | 86.30% | 86.00% | 85.20% |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (7.70%) | (5.70%) | ||
Inpatient Services | Skilled Nursing Facilities | ||||
Segment Reporting Information | ||||
Net revenues | $ 1,103,554,000 | $ 1,192,498,000 | $ 3,404,181,000 | $ 3,595,258,000 |
Increase (Decrease) in Net Revenue From Prior Period | $ (88,944,000) | $ (191,077,000) | ||
Inpatient Services | Skilled Nursing Facilities | Product Concentration Risk | Sales Revenue, Net [Member] | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 83.80% | 84.00% | 84.00% | 82.90% |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (7.50%) | (5.30%) | ||
Inpatient Services | Assisted Senior Living Facilities | ||||
Segment Reporting Information | ||||
Net revenues | $ 24,185,000 | $ 29,423,000 | $ 72,262,000 | $ 90,772,000 |
Increase (Decrease) in Net Revenue From Prior Period | $ (5,238,000) | $ (18,510,000) | ||
Inpatient Services | Assisted Senior Living Facilities | Product Concentration Risk | Sales Revenue, Net [Member] | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 1.80% | 2.10% | 1.80% | 2.10% |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (17.80%) | (20.40%) | ||
Inpatient Services | Administration of third party facilities | ||||
Segment Reporting Information | ||||
Net revenues | $ 2,266,000 | $ 2,659,000 | $ 6,841,000 | $ 8,608,000 |
Increase (Decrease) in Net Revenue From Prior Period | $ (393,000) | $ (1,767,000) | ||
Inpatient Services | Administration of third party facilities | Product Concentration Risk | Sales Revenue, Net [Member] | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 0.20% | 0.20% | 0.20% | 0.20% |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (14.80%) | (20.50%) | ||
Rehabilitation therapy service | ||||
Segment Reporting Information | ||||
Net revenues | $ 151,898,000 | $ 160,387,000 | $ 456,006,000 | $ 510,644,000 |
Increase (Decrease) in Net Revenue From Prior Period | $ (8,489,000) | $ (54,638,000) | ||
Rehabilitation therapy service | Product Concentration Risk | Sales Revenue, Net [Member] | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 11.60% | 11.30% | 11.30% | 11.90% |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (5.30%) | (10.70%) | ||
Rehabilitation therapy service | Therapy Services | ||||
Segment Reporting Information | ||||
Net revenues | $ 244,471,000 | $ 261,543,000 | $ 743,605,000 | $ 821,704,000 |
Increase (Decrease) in Net Revenue From Prior Period | $ (17,072,000) | $ (78,099,000) | ||
Rehabilitation therapy service | Therapy Services | Product Concentration Risk | Sales Revenue, Net [Member] | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 18.60% | 18.40% | 18.40% | 19.10% |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (6.50%) | (9.50%) | ||
Other Services | ||||
Segment Reporting Information | ||||
Net revenues | $ 33,919,000 | $ 34,367,000 | $ 107,709,000 | $ 125,365,000 |
Increase (Decrease) in Net Revenue From Prior Period | $ (448,000) | $ (17,656,000) | ||
Other Services | Product Concentration Risk | Sales Revenue, Net [Member] | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 2.60% | 2.40% | 2.70% | 2.90% |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (1.30%) | (14.10%) | ||
Other Services | Other Services | ||||
Segment Reporting Information | ||||
Net revenues | $ 42,901,000 | $ 40,376,000 | $ 133,168,000 | $ 142,336,000 |
Increase (Decrease) in Net Revenue From Prior Period | $ 2,525,000 | $ (9,168,000) | ||
Other Services | Other Services | Product Concentration Risk | Sales Revenue, Net [Member] | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 3.30% | 2.80% | 3.30% | 3.30% |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | 6.30% | (6.40%) | ||
Operating Segments | Inpatient Services | ||||
Segment Reporting Information | ||||
Net revenues | $ 1,130,005,000 | $ 1,224,580,000 | $ 3,483,284,000 | $ 3,694,638,000 |
Salaries, wages and benefits | 507,075,000 | 586,654,000 | 1,597,007,000 | 1,748,232,000 |
Other operating expenses | 442,816,000 | 428,820,000 | 1,303,448,000 | 1,296,069,000 |
Provision for losses on accounts receivable | 22,078,000 | 21,088,000 | 62,448,000 | 68,757,000 |
Lease expense | 37,895,000 | 34,745,000 | 110,661,000 | 107,047,000 |
Depreciation and amortization expense | 51,666,000 | 53,313,000 | 159,483,000 | 167,208,000 |
Interest expense | 103,306,000 | 109,339,000 | 309,948,000 | 328,385,000 |
Other loss (income) | 2,379,000 | (4,991,000) | 15,112,000 | (4,119,000) |
Long-lived asset impairments | 161,483,000 | 161,483,000 | ||
Goodwill and identifiable intangible asset impairments | 360,046,000 | 360,046,000 | ||
(Loss) income before income tax benefit | (558,739,000) | (4,388,000) | (596,352,000) | (16,941,000) |
(Loss) income from continuing operations | (558,739,000) | (4,388,000) | (596,352,000) | (16,941,000) |
Operating Segments | Rehabilitation therapy service | ||||
Segment Reporting Information | ||||
Net revenues | 244,471,000 | 261,543,000 | 743,605,000 | 821,704,000 |
Salaries, wages and benefits | 205,232,000 | 219,864,000 | 619,928,000 | 689,833,000 |
Other operating expenses | 19,455,000 | 18,903,000 | 56,433,000 | 58,927,000 |
Provision for losses on accounts receivable | 1,974,000 | 4,722,000 | 8,641,000 | 12,165,000 |
Lease expense | (14,000) | 24,000 | 71,000 | |
Depreciation and amortization expense | 3,497,000 | 2,943,000 | 11,110,000 | 9,137,000 |
Interest expense | 14,000 | 14,000 | 42,000 | 43,000 |
Other loss (income) | 732,000 | |||
Customer receivership | 297,000 | 35,864,000 | ||
Long-lived asset impairments | 1,881,000 | 1,881,000 | ||
(Loss) income before income tax benefit | 12,135,000 | 15,073,000 | 8,974,000 | 51,528,000 |
(Loss) income from continuing operations | 12,135,000 | 15,073,000 | 8,974,000 | 51,528,000 |
Operating Segments | Other Services | ||||
Segment Reporting Information | ||||
Net revenues | 42,778,000 | 40,226,000 | 132,718,000 | 141,970,000 |
Salaries, wages and benefits | 27,097,000 | 27,896,000 | 86,365,000 | 96,759,000 |
Other operating expenses | 15,242,000 | 10,610,000 | 44,456,000 | 36,198,000 |
Provision for losses on accounts receivable | 447,000 | (161,000) | 995,000 | 993,000 |
Lease expense | 302,000 | 269,000 | 897,000 | 1,209,000 |
Depreciation and amortization expense | 167,000 | 163,000 | 506,000 | 805,000 |
Interest expense | 9,000 | 10,000 | 28,000 | 30,000 |
Other loss (income) | (182,000) | (43,965,000) | ||
(Loss) income before income tax benefit | (486,000) | 1,621,000 | (529,000) | 49,941,000 |
(Loss) income from continuing operations | (486,000) | 1,621,000 | (529,000) | 49,941,000 |
Corporate, Non-Segment | ||||
Segment Reporting Information | ||||
Net revenues | 123,000 | 150,000 | 450,000 | 366,000 |
General and administrative costs | 40,732,000 | 46,545,000 | 127,041,000 | 139,999,000 |
Provision for losses on accounts receivable | 688,000 | (47,000) | 616,000 | (139,000) |
Lease expense | 487,000 | 474,000 | 1,446,000 | 1,469,000 |
Depreciation and amortization expense | 4,060,000 | 4,685,000 | 12,887,000 | 13,672,000 |
Interest expense | 21,102,000 | 22,449,000 | 63,455,000 | 72,395,000 |
Loss on early extinguishment of debt | 15,363,000 | 2,301,000 | 15,830,000 | |
Investment income | (1,596,000) | (934,000) | (4,097,000) | (2,073,000) |
Other loss (income) | (242,000) | |||
Transaction costs | 1,056,000 | 3,057,000 | 7,862,000 | 9,804,000 |
Skilled Healthcare and other loss contingency expense | 15,192,000 | |||
Equity in net income of unconsolidated affiliates | (571,000) | (1,608,000) | (1,702,000) | (3,894,000) |
(Loss) income before income tax benefit | (65,835,000) | (89,834,000) | (209,117,000) | (261,889,000) |
Income tax expense (benefit) | 1,596,000 | (25,888,000) | 5,683,000 | (19,738,000) |
(Loss) income from continuing operations | (67,431,000) | (63,946,000) | (214,800,000) | (242,151,000) |
Elimination | ||||
Segment Reporting Information | ||||
Net revenues | (101,925,000) | (107,505,000) | (314,197,000) | (329,108,000) |
Other operating expenses | (101,926,000) | (107,505,000) | (314,198,000) | (329,108,000) |
Equity in net income of unconsolidated affiliates | 502,000 | 715,000 | 1,411,000 | 1,741,000 |
(Loss) income before income tax benefit | (501,000) | (715,000) | (1,410,000) | (1,741,000) |
(Loss) income from continuing operations | (501,000) | (715,000) | (1,410,000) | (1,741,000) |
Elimination | Inpatient Services | ||||
Segment Reporting Information | ||||
Net revenues | (370,000) | (340,000) | (1,139,000) | (1,077,000) |
Increase (Decrease) in Net Revenue From Prior Period | $ (30,000) | $ (62,000) | ||
Elimination | Inpatient Services | Product Concentration Risk | Sales Revenue, Net [Member] | ||||
Segment Reporting Information | ||||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | 8.80% | 5.80% | ||
Elimination | Rehabilitation therapy service | ||||
Segment Reporting Information | ||||
Net revenues | $ (92,573,000) | $ (101,156,000) | $ (287,599,000) | $ (311,060,000) |
Increase (Decrease) in Net Revenue From Prior Period | $ 8,583,000 | $ 23,461,000 | ||
Elimination | Rehabilitation therapy service | Product Concentration Risk | Sales Revenue, Net [Member] | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | (7.00%) | (7.10%) | (7.10%) | (7.20%) |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (8.50%) | (7.50%) | ||
Elimination | Other Services | ||||
Segment Reporting Information | ||||
Net revenues | $ (25,459,000) | $ (16,971,000) | ||
Increase (Decrease) in Net Revenue From Prior Period | $ (8,488,000) | |||
Elimination | Other Services | Product Concentration Risk | Sales Revenue, Net [Member] | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | (0.60%) | (0.40%) | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | 50.00% | |||
Elimination | Other Services | Other Services | ||||
Segment Reporting Information | ||||
Net revenues | $ (8,982,000) | $ (6,009,000) | ||
Increase (Decrease) in Net Revenue From Prior Period | $ (2,973,000) | |||
Elimination | Other Services | Other Services | Product Concentration Risk | Sales Revenue, Net [Member] | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | (0.70%) | (0.40%) | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | 49.50% |
Segment Information - Assets an
Segment Information - Assets and Goodwill by Segment (Details) $ in Thousands | Nov. 01, 2016item | Sep. 30, 2017USD ($) | Sep. 30, 2017USD ($)facility | Dec. 31, 2016USD ($) |
Segment Reporting, Asset Reconciling Item | ||||
Segment total assets | $ 4,926,928 | $ 4,926,928 | $ 5,779,201 | |
Goodwill included in total assets | 85,642 | 85,642 | 440,712 | |
Goodwill impairment associated with inpatient segment | $ 351,470 | |||
Number Of Facilities Sold | 64 | 9 | ||
Number of facilities planned for divestitures | facility | 7 | |||
Derecognized goodwill | $ 3,600 | |||
Corporate and Eliminations | ||||
Segment Reporting, Asset Reconciling Item | ||||
Segment total assets | 87,365 | 87,365 | 62,319 | |
Inpatient Services | ||||
Segment Reporting, Asset Reconciling Item | ||||
Segment total assets | 4,376,132 | 4,376,132 | 5,194,811 | |
Goodwill included in total assets | 355,070 | |||
Goodwill impairment associated with inpatient segment | 351,500 | $ 351,500 | ||
Number Of Facilities Sold | facility | 9 | |||
Number of facilities planned for divestitures | facility | 7 | |||
Derecognized goodwill | $ 3,600 | |||
Rehabilitation therapy service | ||||
Segment Reporting, Asset Reconciling Item | ||||
Segment total assets | 411,195 | 411,195 | 454,723 | |
Goodwill included in total assets | 73,814 | 73,814 | 73,814 | |
Other Services | ||||
Segment Reporting, Asset Reconciling Item | ||||
Segment total assets | 52,236 | 52,236 | 67,348 | |
Goodwill included in total assets | $ 11,828 | $ 11,828 | $ 11,828 |
Property and Equipment (Details
Property and Equipment (Details) $ in Thousands | Nov. 01, 2016item | Sep. 30, 2017USD ($)leasefacility | Dec. 31, 2016USD ($)facility |
Property, Plant and Equipment [Line Items] | |||
Gross property and equipment | $ 4,351,995 | $ 4,573,169 | |
Less accumulated depreciation | (881,049) | (807,776) | |
Net property and equipment | $ 3,470,946 | $ 3,765,393 | |
Number of lease agreements amended | lease | 1 | ||
Number of facilities sold | 64 | 9 | |
Number of facilities classified as held for sale | facility | 16 | ||
Capital Lease, Asset Write-down | $ 14,900 | ||
Property, Plant and Equipment, Disposals | 55,600 | ||
Accumulated Depreciation, Depletion and Amortization, Sale or Disposal of Property, Plant and Equipment | 40,700 | ||
Property and equipment, Impairment charges | 163,400 | ||
Land, Buildings and Improvements | |||
Property, Plant and Equipment [Line Items] | |||
Gross property and equipment | 604,985 | $ 673,092 | |
Capital lease land, buildings and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Gross property and equipment | 745,245 | 818,273 | |
Financing obligation land, buildings and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Gross property and equipment | 2,522,415 | 2,584,178 | |
Equipment, furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Gross property and equipment | 456,990 | 447,767 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Gross property and equipment | $ 22,360 | $ 49,859 |
Goodwill and Identifiable Int42
Goodwill and Identifiable Intangible Assets - Changes in Carrying Value of Goodwill (Details) $ in Thousands | Nov. 01, 2016item | Sep. 30, 2017USD ($) | Sep. 30, 2017USD ($)facility |
Goodwill [Line Items] | |||
Goodwill, Beginning Balance | $ 440,712 | ||
Goodwill disposal associated with inpatient divestitures | (3,600) | ||
Goodwill impairment associated with inpatient segment | (351,470) | ||
Goodwill, Ending Balance | $ 85,642 | 85,642 | |
Accumulated amortization of goodwill | 0 | $ 0 | |
Number of facilities sold | 64 | 9 | |
Number of facilities planned for divestitures | facility | 7 | ||
Inpatient Services | |||
Goodwill [Line Items] | |||
Goodwill, Beginning Balance | $ 355,070 | ||
Goodwill disposal associated with inpatient divestitures | (3,600) | ||
Goodwill impairment associated with inpatient segment | $ (351,500) | $ (351,500) | |
Number of facilities sold | facility | 9 | ||
Number of facilities planned for divestitures | facility | 7 |
Goodwill and Identifiable Int43
Goodwill and Identifiable Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Schedule of Finite and Indefinite-Lived Intangible Assets [Line Items] | ||
Identifiable intangible assets | $ 147,239 | $ 175,566 |
Accumulated amortization on intangible assets | 84,073 | 91,155 |
Trade names | ||
Schedule of Finite and Indefinite-Lived Intangible Assets [Line Items] | ||
Trade names | 50,556 | 50,556 |
Customer relationships | ||
Schedule of Finite and Indefinite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets | 60,166 | 67,348 |
Accumulated amortization on intangible assets | $ 52,667 | $ 43,862 |
Weighted Average Remaining Life | 8 years | 9 years |
Management contracts | ||
Schedule of Finite and Indefinite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets | $ 14,651 | |
Accumulated amortization on intangible assets | $ 17,872 | |
Weighted Average Remaining Life | 2 years | |
Favorable lease contracts | ||
Schedule of Finite and Indefinite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets | $ 36,517 | $ 43,011 |
Accumulated amortization on intangible assets | $ 31,406 | $ 29,421 |
Weighted Average Remaining Life | 10 years | 10 years |
Goodwill and Identifiable Int44
Goodwill and Identifiable Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity | ||||
2,018 | $ 17 | $ 17 | ||
2,019 | 16.7 | 16.7 | ||
2,020 | 12.6 | 12.6 | ||
2,021 | 11.1 | 11.1 | ||
2,022 | 7.2 | 7.2 | ||
Thereafter | 32.1 | 32.1 | ||
Impairment of intangible assets, finite-lived | 8.5 | $ 0 | 8.5 | $ 0 |
Customer relationships | ||||
Finite-Lived Intangible Assets | ||||
Amortization expense | 2.6 | 2.6 | 7.7 | 7.7 |
Management contracts | ||||
Finite-Lived Intangible Assets | ||||
Amortization expense | 2.3 | 2.3 | 6.8 | 6.8 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity | ||||
Impairment of intangible assets, finite-lived | 7.3 | 7.3 | ||
Favorable lease contracts | ||||
Finite-Lived Intangible Assets | ||||
Amortization expense | $ 1.7 | $ 2 | 5.3 | $ 6.1 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity | ||||
Impairment of intangible assets, finite-lived | $ 1.2 |
Long-Term Debt - (Details)
Long-Term Debt - (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Long-term debt | ||
Total long-term debt | $ 1,135,358 | $ 1,171,144 |
Current installments of long-term debt | (851,344) | (24,594) |
Long-term debt | 284,014 | 1,146,550 |
New term loan agreement | ||
Long-term debt | ||
Total long-term debt | 116,290 | 116,174 |
Debt issuance costs | 3,710 | 4,400 |
Real estate bridge loan | ||
Long-term debt | ||
Total long-term debt | 289,120 | 313,549 |
Debt issuance costs | 5,396 | 4,773 |
HUD insured loans | ||
Long-term debt | ||
Total long-term debt | 261,370 | 241,570 |
Debt issuance costs | 842 | 990 |
Welltower Notes | ||
Long-term debt | ||
Total long-term debt | 76,337 | 73,829 |
Mortgages and other secured debt (recourse) | ||
Long-term debt | ||
Total long-term debt | 12,711 | 13,235 |
Mortgages and other secured debt (non-recourse) | ||
Long-term debt | ||
Total long-term debt | 28,283 | 29,157 |
Debt issuance costs | 121 | 131 |
Revolving Credit Facility | ||
Long-term debt | ||
Total long-term debt | 351,247 | 383,630 |
Original issue discount | 9,952 | 9,220 |
Debt issuance costs | $ 3,312 | $ 3,859 |
Long-Term Debt - Revolving Cred
Long-Term Debt - Revolving Credit Facilities (Details) $ in Thousands | Jul. 29, 2016 | Sep. 30, 2017USD ($)item | Dec. 31, 2020 |
Long-term debt | |||
Revolving credit facility | $ 361,200 | ||
Total borrowing base capacity | $ 525,000 | ||
Weighted Average Interest Rate | 5.06% | ||
Tranche A-1 | |||
Long-term debt | |||
Revolving credit facility | $ 300,000 | ||
Total borrowing base capacity | $ 440,000 | ||
Weighted Average Interest Rate | 5.14% | ||
Tranche A-1 | LIBOR | Minimum | |||
Long-term debt | |||
Basis spread on variable rate | 3.00% | ||
Tranche A-1 | LIBOR | Maximum | |||
Long-term debt | |||
Basis spread on variable rate | 3.50% | ||
Tranche A-2 | |||
Long-term debt | |||
Revolving credit facility | $ 35,800 | ||
Total borrowing base capacity | $ 50,000 | ||
Weighted Average Interest Rate | 4.74% | ||
Tranche A-2 | LIBOR | Minimum | |||
Long-term debt | |||
Basis spread on variable rate | 3.00% | ||
Tranche A-2 | LIBOR | Maximum | |||
Long-term debt | |||
Basis spread on variable rate | 3.50% | ||
HUD Tranche | |||
Long-term debt | |||
Revolving credit facility | $ 25,400 | ||
Total borrowing base capacity | $ 35,000 | ||
Weighted Average Interest Rate | 4.50% | ||
HUD Tranche | LIBOR | Minimum | |||
Long-term debt | |||
Basis spread on variable rate | 1.50% | 2.50% | |
HUD Tranche | LIBOR | Maximum | |||
Long-term debt | |||
Basis spread on variable rate | 2.00% | 3.00% | |
Revolving Credit Facility | |||
Long-term debt | |||
Line of Credit Facility, Maximum Borrowing Capacity | $ 525,000 | ||
Debt Instrument Number of Tranches | item | 3 | ||
Revolving credit facility | $ 361,200 | ||
Total borrowing base capacity | 457,900 | ||
Outstanding Letters of Credit | 54,800 | ||
Available borrowing capacity under the revolving credit facilities | $ 41,900 | ||
Revolving Credit Facility | Minimum | |||
Long-term debt | |||
Commitment fee rate (as percentage) | 0.375% | ||
Revolving Credit Facility | Maximum | |||
Long-term debt | |||
Commitment fee rate (as percentage) | 0.50% | ||
Revolving Credit Facility | Federal Funds | |||
Long-term debt | |||
Basis spread on variable rate | 3.00% | ||
Revolving Credit Facility Amendment | Maximum | |||
Long-term debt | |||
Leverage ratio | 7.25% | ||
Revolving Credit Facility Amendment | Forecast | |||
Long-term debt | |||
Leverage ratio | 6.50% | ||
Revolving Credit Facility Amendment | Tranche A-1 | Base Rate | Minimum | |||
Long-term debt | |||
Basis spread on variable rate | 2.00% | ||
Revolving Credit Facility Amendment | Tranche A-1 | Base Rate | Maximum | |||
Long-term debt | |||
Basis spread on variable rate | 2.50% | ||
Revolving Credit Facility Amendment | Tranche A-2 | Base Rate | Minimum | |||
Long-term debt | |||
Basis spread on variable rate | 2.00% | ||
Revolving Credit Facility Amendment | Tranche A-2 | Base Rate | Maximum | |||
Long-term debt | |||
Basis spread on variable rate | 2.50% |
Long-Term Debt - Term Loan Faci
Long-Term Debt - Term Loan Facility and New Term Loan Agreement (Details) - New Term Loan Facility $ in Millions | Jul. 29, 2016USD ($)item | Sep. 30, 2017USD ($) | Dec. 31, 2020 |
Term Loan Facility and New Term Loan Agreement | |||
Outstanding principal balance under term loan facility | $ 119.6 | ||
Number of maintenance covenants | item | 4 | ||
Forecast | |||
Term Loan Facility and New Term Loan Agreement | |||
Leverage ratio | 6.50% | ||
Maximum | |||
Term Loan Facility and New Term Loan Agreement | |||
Leverage ratio | 7.25% | ||
Affiliate Of Welltower Inc And Affiliate Of Omega Healthcare Investors Inc | |||
Term Loan Facility and New Term Loan Agreement | |||
Term of debt | 4 years | ||
Aggregate principal amount | $ 120 | ||
Debt Instrument Annual Amortization Rate In Years One, Two and Three As Percent | 2.50% | ||
Annual amortization in years four, percent | 5.00% | ||
Affiliate Of Welltower Inc And Affiliate Of Omega Healthcare Investors Inc | Maximum | |||
Term Loan Facility and New Term Loan Agreement | |||
Interest paid in cash or paid-in-kind (as a percent) | 2.00% | ||
Affiliate Of Welltower Inc And Affiliate Of Omega Healthcare Investors Inc | Base Rate | |||
Term Loan Facility and New Term Loan Agreement | |||
Basis spread on variable rate | 13.00% | ||
Debt Instrument Variable Interest Rate Floor | 1.00% | ||
Floor rate (as a percent) | 1.00% | ||
Affiliate Of Welltower Inc And Affiliate Of Omega Healthcare Investors Inc | Available Bit Rate | |||
Term Loan Facility and New Term Loan Agreement | |||
Basis spread on variable rate | 12.00% | ||
Debt Instrument Variable Interest Rate Floor | 2.00% | ||
Floor rate (as a percent) | 2.00% |
Long-Term Debt - Real Estate Br
Long-Term Debt - Real Estate Bridge Loans (Details) $ in Millions | Nov. 01, 2016item | Oct. 01, 2016loanitem | Apr. 01, 2016USD ($)facility | Sep. 30, 2017USD ($)facilityloanitem | Dec. 31, 2015facility | Dec. 31, 2016facility |
Long-term debt | ||||||
Number of facilities acquired | facility | 1 | |||||
Number Of Facilities Sold | 64 | 9 | ||||
Number of facilities classified as held for sale | facility | 16 | |||||
Welltower Bridge Loans | ||||||
Long-term debt | ||||||
Number of separate bridge loan agreements | item | 4 | |||||
Number of loans combined | loan | 2 | |||||
Number of facilities acquired | facility | 87 | |||||
Fixed interest rate | 10.00% | |||||
Annual rate of increase to fixed interest rate | 0.25% | |||||
Number of facilities pledged | item | 39 | |||||
Number of facilities whose operators have receivables secured under second lien | item | 24 | |||||
Repayments of Debt | $ 27.6 | |||||
Number Of Facilities Sold | facility | 3 | |||||
Number of fully retired loan agreements | loan | 1 | |||||
Number of remaining loan agreements | loan | 3 | |||||
Principal balance outstanding | $ 282.9 | |||||
Other Real Estate Bridge Loans | ||||||
Long-term debt | ||||||
Basis spread on variable rate | 4.00% | |||||
Effective interest rate | 5.23% | |||||
Principal balance outstanding | $ 9.9 | |||||
Aggregate principal amount | $ 9.9 | |||||
Term of debt | 3 years | |||||
Real estate bridge loan | Welltower Bridge Loans | ||||||
Long-term debt | ||||||
Repayments of Debt | $ 18.6 | |||||
Skilled Nursing Facilities | ||||||
Long-term debt | ||||||
Number Of Facilities Sold | loan | 3 | |||||
Skilled Nursing Facilities | Welltower Bridge Loans | ||||||
Long-term debt | ||||||
Repayments of Debt | $ 9 |
Long-Term Debt - HUD Insured Lo
Long-Term Debt - HUD Insured Loans (Details) $ in Millions | Nov. 01, 2016item | Sep. 30, 2017USD ($)facilityloan |
Long-term debt | ||
Number Of Facilities Sold | 64 | 9 |
Weighted Average Interest Rate | 5.06% | |
HUD insured loans | ||
Long-term debt | ||
Principal balance outstanding | $ 23.9 | |
Number Of Facilities Sold | facility | 13 | |
Termination Loans | $ 63.1 | |
Number of facilities financed by HUD | facility | 3 | |
Debt instrument average remaining term (in years) | 30 years | |
Weighted Average Interest Rate | 3.50% | |
Debt instrument period in which prepayment is not allowed (in months) | 12 months | |
Prepayment penalty (as a percentage) | 10.00% | |
Decrease in prepayment penalty (as a percentage) | 1.00% | |
HUD insured loans | Minimum | ||
Long-term debt | ||
Term of debt | 30 years | |
Fixed interest rate | 3.00% | |
HUD insured loans | Maximum | ||
Long-term debt | ||
Term of debt | 35 years | |
Fixed interest rate | 4.20% | |
Prepaid Expenses and Other Current Assets [Member] | HUD insured loans | ||
Long-term debt | ||
Escrow reserve funds | $ 21.2 | |
Skilled Nursing Facilities | ||
Long-term debt | ||
Number Of Facilities Sold | loan | 3 | |
Skilled Nursing Facilities | HUD insured loans | ||
Long-term debt | ||
Number of debt instruments insured by HUD | facility | 29 | |
Principal balance outstanding | $ 266.8 | |
Debt premium | $ 13.7 | |
Number of debt instruments with a debt premium | facility | 10 |
Long-Term Debt - Notes Payable
Long-Term Debt - Notes Payable (Details) $ in Millions | Dec. 23, 2016USD ($)loanitem | Nov. 01, 2016USD ($)item | Sep. 30, 2017USD ($)facility |
Long-term debt | |||
Number Of Facilities Sold | 64 | 9 | |
Welltower Inc | |||
Long-term debt | |||
Number Of Facilities Sold | item | 28 | ||
Note Payable Due October 30, 2020 | Welltower Inc | |||
Long-term debt | |||
Principal balance outstanding | $ 51.2 | $ 53 | |
Cash interest rate | 3.00% | ||
Paid-in-kind interest rate | 7.00% | ||
Welltower Notes Due December 2021 | |||
Long-term debt | |||
Number of notes issued | loan | 2 | ||
Debt Instrument, Face Amount | $ 23.7 | ||
Note Payable Due December 15 2021 | |||
Long-term debt | |||
Principal balance outstanding | 12.1 | ||
Cash interest rate | 3.00% | ||
Paid-in-kind interest rate | 7.00% | ||
Debt Instrument, Face Amount | $ 11.7 | ||
Convertible Note Payable Due December 15 2021 | |||
Long-term debt | |||
Principal balance outstanding | $ 12.2 | ||
Cash interest rate | 3.00% | ||
Paid-in-kind interest rate | 3.00% | ||
Debt Instrument, Face Amount | $ 12 | ||
Number of shares into which the debt instrument may be converted | item | 3,000,000 |
Long-Term Debt - Other (Details
Long-Term Debt - Other (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2017USD ($)loan | |
Long-term debt | |
Weighted Average Interest Rate | 5.06% |
Mortgages and other secured debt (recourse) | |
Long-term debt | |
Weighted Average Interest Rate | 3.30% |
Mortgages and other secured debt (non-recourse) | |
Long-term debt | |
Weighted Average Interest Rate | 4.60% |
Debt premium available to offset non-recourse loans | $ 1.6 |
Number of debt instruments with a debt premium | loan | 1 |
Increase in current debt due to reclassification of non-recourse loan | $ 11.5 |
Long-term debt reclassified to current | $ 11.5 |
Long-Term Debt - Debt Covenants
Long-Term Debt - Debt Covenants (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Long-Term Debt Abstract | ||
Term of forbearance agreement | 90 days | |
Current installments of long-term debt | $ 851,344 | $ 24,594 |
Twelve months ended March 31, | ||
2,017 | 28,372 | |
2,018 | 17,584 | |
2,019 | 486,141 | |
2,020 | 59,069 | |
2,021 | 313,491 | |
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
Thereafter | 238,686 | |
Total long-term debt | $ 1,143,343 |
Lease and Lease Commitments - F
Lease and Lease Commitments - Future Minimum Capital and Operating Lease Payments - 10Q (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Capital Leases, Future Minimum Payments Due, Rolling Maturity | ||
2,017 | $ 90,425 | |
2,018 | 93,333 | |
2,019 | 92,453 | |
2,020 | 94,561 | |
2,021 | 96,755 | |
Thereafter | 2,967,233 | |
Total future minimum lease payments | 3,434,760 | |
Less amount representing interest | (2,439,736) | |
Capital lease obligation | 995,024 | |
Less current portion | (949,050) | $ (1,886) |
Capital lease obligations | 45,974 | 997,340 |
Operating Leases, Future Minimum Payments Due, Rolling Maturity | ||
2,017 | 142,646 | |
2,018 | 139,688 | |
2,019 | 139,419 | |
2,020 | 135,437 | |
2,021 | 112,149 | |
Thereafter | 227,737 | |
Total future minimum lease payments | 897,076 | |
Current capital lease obligation | 949,050 | $ 1,886 |
Amount of operating lease liability that will be due and payable if defaulted upon | $ 617,800 |
Lease and Lease Commitments - C
Lease and Lease Commitments - Capital Lease Rates and Deferred Balances (Details) $ in Millions | Jun. 30, 2017loan | Sep. 30, 2017USD ($)leasefacility | Dec. 31, 2016USD ($) |
Weighted average interest rate | 10.00% | ||
Number of leases with unmet financial covenants | lease | 3 | ||
Number of facilities under leases with unmet financial covenants | facility | 26 | ||
Identifiable Intangible Assets [Member] | |||
Net favorable leases | $ 36.5 | $ 43 | |
Other Noncurrent Liabilities [Member] | |||
Net unfavorable leases | 19 | 28.8 | |
Deferred straight-line rent balances included in other long-term liabilities | $ 34.4 | $ 31.6 | |
Master Lease Agreement C B Y W [Member] | |||
Number of facilities in the master lease agreement | loan | 28 |
Financing Obligation (Details)
Financing Obligation (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Present Value of Future Minimum Lease Payments, Sale Leaseback Transactions, Rolling Maturity | ||
2,017 | $ 275,150 | |
2,018 | 281,193 | |
2,019 | 287,838 | |
2,020 | 294,677 | |
2,021 | 292,964 | |
Thereafter | 7,929,586 | |
Total future minimum lease payments | 9,361,408 | |
Less amount representing interest | (6,444,677) | |
Financing obligation | 2,916,731 | |
Less current portion | (2,908,020) | $ (1,613) |
Long-term financing obligation | $ 8,711 | $ 2,867,534 |
Weighted average interest rate | 10.60% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income tax benefit | $ (1,596) | $ 25,888 | $ (5,683) | $ 19,738 |
Effective tax rate | (0.30%) | 33.10% | (0.70%) | 11.00% |
Deferred tax liability adjustments | $ 11,500 | $ 3,000 | ||
Release of FIN48 reserve | $ 28,200 | |||
Decrease to deferred tax liability due to goodwill impairment | (9,700) | |||
Net operating loss carryforwards | $ 0 | $ 0 | ||
FC-GEN Operations Investment, LLC | ||||
Percentage of voting interests acquired | 60.60% | 60.60% | ||
Tax receivable agreement, potential payment as percentage of cash savings | 90.00% | |||
Goodwill Tax Deductible Amount Tax Basis Step Up | $ 14,500 | $ 900 | $ 14,500 | $ 900 |
F C Gen Units And Class C Shares [Member] | ||||
Number of membership units and Class C shares exchanged for Class A shares | 2,248,869 | 200,000 | ||
Class A Common Stock | ||||
Number of Class A shares issued in exchange for membership units and Class C shares | 2,249,256 | 200,034 |
Commitments and Contingencies -
Commitments and Contingencies - Self Insurance Risks (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |||||
Workers' compensation approximate discount rate (as a percentage) | 1.00% | ||||
Workers' Compensation discount rate (as a percentage) | 1.48% | ||||
Potential effect of discounting on Workers Compensation reserve | $ 6.5 | $ 6.5 | $ 8.9 | ||
Provision for general and professional liability | 33.8 | $ 34.1 | 102.2 | $ 104.3 | |
Reserve for general and professional liability | 425.6 | 425.6 | 392.1 | ||
Provision for workers' compensation | 16.4 | $ 20.2 | 45.3 | $ 42.2 | |
Reserve for workers' compensation risks | 198.1 | 198.1 | 226 | ||
Health insurance reserve | $ 18.1 | $ 18.1 | $ 19.6 |
Commitments and Contingencies58
Commitments and Contingencies - Litigation (Details) $ in Millions | Jun. 09, 2017USD ($)item | Aug. 06, 2014plaintiff | Sep. 30, 2017USD ($)item |
Creekside Hospice Investigation | |||
Loss Contingencies | |||
Number of Qui Tam proceedings | plaintiff | 2 | ||
Creekside Hospice Therapy Matters Investigation Staffing Matters Investigation And Sundance Part B Therapy Matter (Member) | |||
Loss Contingencies | |||
Loss contingency settlement term | 5 years | ||
Accrued contingent liability | $ 49.2 | ||
Creekside Hospice Therapy Matters Investigation Staffing Matters Investigation And Sundance Part B Therapy Matter (Member) | Other Noncurrent Liabilities [Member] | |||
Loss Contingencies | |||
Accrued contingent liability | 40.2 | ||
Creekside Hospice Therapy Matters Investigation Staffing Matters Investigation And Sundance Part B Therapy Matter (Member) | Accounts Payable and Accrued Liabilities [Member] | |||
Loss Contingencies | |||
Accrued contingent liability | $ 9 | ||
Creekside Hospice Therapy Matters Investigation Staffing Matters Investigation And Sundance Part B Therapy Matter (Member) | Governmental Claims | |||
Loss Contingencies | |||
Number of matters under agreement in principle | item | 4 | ||
Litigation settlement amount | $ 52.7 | ||
SunDance Part B Therapy Matter | |||
Loss Contingencies | |||
Number of subsidiary agencies outside of Georgia that are part of the Qui Tam proceeding | item | 0 |
Fair Value of Financial Instr59
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Assets, Fair Value Disclosure [Abstract] | ||
Property and equipment, Impairment charges | $ 163,400 | |
Goodwill, Impairment Loss | 351,470 | |
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Revolving credit facility | 361,200 | |
Carrying value | 1,135,358 | $ 1,171,144 |
New term loan agreement | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Carrying value | 116,290 | 116,174 |
Skilled Real Estate Bridge Loan | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Carrying value | 289,120 | 313,549 |
HUD insured loans | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Carrying value | 261,370 | 241,570 |
Welltower Notes | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Carrying value | 76,337 | 73,829 |
Mortgages and other secured debt (recourse) | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Carrying value | 12,711 | 13,235 |
Mortgages and other secured debt (non-recourse) | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Carrying value | 28,283 | 29,157 |
Revolving Credit Facility | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Revolving credit facility | 361,200 | |
Carrying value | 351,247 | 383,630 |
Original issue discount | 9,952 | 9,220 |
Letter of Credit | ||
Assets, Fair Value Disclosure [Abstract] | ||
Financial instruments with an off-balance-sheet risk, in the form of outstanding letters of credit | 54,800 | |
Level 2 | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 1,122,173 | 1,156,557 |
Level 2 | New term loan agreement | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 116,290 | 116,174 |
Level 2 | Skilled Real Estate Bridge Loan | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 289,120 | 313,549 |
Level 2 | HUD insured loans | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 248,185 | 226,983 |
Level 2 | Welltower Notes | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 76,337 | 73,829 |
Level 2 | Mortgages and other secured debt (recourse) | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 12,711 | 13,235 |
Level 2 | Mortgages and other secured debt (non-recourse) | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 28,283 | 29,157 |
Level 2 | Revolving Credit Facility | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 351,247 | 383,630 |
Fair Value, Measurements, Recurring | ||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and equivalents | 50,591 | 51,408 |
Restricted cash and equivalents | 16,018 | 12,052 |
Restricted investments in marketable securities | 124,358 | 143,974 |
Assets, Fair Value Disclosure, Total | 190,967 | 207,434 |
Fair Value, Measurements, Recurring | Level 1 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and equivalents | 50,591 | 51,408 |
Restricted cash and equivalents | 16,018 | 12,052 |
Restricted investments in marketable securities | 124,358 | 143,974 |
Assets, Fair Value Disclosure, Total | 190,967 | 207,434 |
Fair Value, Measurements, Nonrecurring [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Property and equipment, Impairment charges | 163,364 | |
Goodwill, Impairment Loss | 351,470 | |
Intangible assets, Impairment Loss | 8,576 | |
Fair Value, Measurements, Nonrecurring [Member] | Level 3 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Property and equipment, net | 3,470,946 | 3,765,393 |
Goodwill | 85,642 | 440,712 |
Intangible assets | $ 147,239 | $ 175,566 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Millions | May 01, 2016USD ($) | Apr. 01, 2016facility | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) |
Related Party Transaction | |||||||
Number of facilities acquired | facility | 1 | ||||||
Disposed by sale | Hospice And Home Health Operations | |||||||
Related Party Transaction | |||||||
Cash proceeds | $ 72 | ||||||
Noncash consideration received in disposal | $ 12 | ||||||
Short-term Debt | $ 14.1 | $ 14.1 | |||||
Rehabilitation Services | |||||||
Related Party Transaction | |||||||
Net revenue from related party | 35.1 | $ 38.1 | 109.1 | $ 118.6 | |||
Net accounts receivable from related party | 83.2 | 83.2 | $ 79.7 | ||||
FC PAC | Hospice And Diagnostic Services | |||||||
Related Party Transaction | |||||||
Amount of services in period | $ 3.2 | $ 2.9 | $ 8.9 | $ 9.4 | |||
Director | Disposed by sale | Hospice And Home Health Operations | |||||||
Related Party Transaction | |||||||
Aggregate ownership interest in counterparty indirectly held by certain board members, as a percent | 10.00% |
Asset Impairment Charges (Detai
Asset Impairment Charges (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Asset Impairment Charges | ||||
Impairment on long-lived assets | $ 163,400 | |||
Impairment of intangible assets, finite-lived | $ 8,500 | $ 0 | 8,500 | $ 0 |
Impairment charges on its favorable lease intangible assets with a definite useful life | 1,200 | 1,200 | ||
Impairment of long-lived assets | 351,470 | |||
Inpatient Services | ||||
Asset Impairment Charges | ||||
Impairment of long-lived assets | 351,500 | 351,500 | ||
Rehabilitation therapy service | ||||
Asset Impairment Charges | ||||
Impairment on long-lived assets | 163,400 | 163,400 | ||
Management contracts | ||||
Asset Impairment Charges | ||||
Impairment of intangible assets, finite-lived | $ 7,300 | $ 7,300 |
Subsequent Events (Details)
Subsequent Events (Details) - Reduction in current cash fixed charge - Forecast - Subsequent Events $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Minimum | |
Subsequent Event [Line Items] | |
Amount of the effect on future cash | $ 80 |
Maximum | |
Subsequent Event [Line Items] | |
Amount of the effect on future cash | $ 100 |