Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 08, 2018 | |
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, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Class A Common Stock | ||
Document and Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 101,235,935 | |
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 | 59,700,801 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 23,170 | $ 54,525 |
Restricted cash and equivalents | 48,675 | 4,113 |
Restricted investments in marketable securities | 36,780 | 33,015 |
Accounts receivable, net of allowances for doubtful accounts of $313,357 at December 31, 2017 | 642,993 | 724,138 |
Prepaid expenses | 76,720 | 74,368 |
Other current assets | 53,173 | 49,748 |
Assets held for sale | 9,533 | |
Total current assets | 891,044 | 939,907 |
Property and equipment, net of accumulated depreciation of $952,205 and $939,155 at September 30, 2018 and December 31, 2017, respectively | 2,919,584 | 3,413,599 |
Restricted cash and equivalents | 56,255 | |
Restricted investments in marketable securities | 101,044 | 93,101 |
Other long-term assets | 107,550 | 109,060 |
Deferred income taxes | 5,151 | 3,580 |
Identifiable intangible assets, net of accumulated amortization of $97,242 and $88,336 at September 30, 2018 and December 31, 2017, respectively | 125,386 | 142,976 |
Goodwill | 85,642 | 85,642 |
Assets held for sale | 99,718 | |
Total assets | 4,391,374 | 4,787,865 |
Current liabilities: | ||
Current installments of long-term debt | 116,077 | 26,962 |
Capital lease obligations | 2,164 | 2,511 |
Financing obligations | 1,947 | 1,878 |
Accounts payable | 239,514 | 285,637 |
Accrued expenses | 215,384 | 233,856 |
Accrued compensation | 165,309 | 167,368 |
Self-insurance reserves | 180,459 | 180,982 |
Current portion of liabilities held for sale | 2,123 | |
Total current liabilities | 922,977 | 899,194 |
Long-term liabilities: | ||
Long-term debt | 1,087,948 | 1,050,337 |
Capital lease obligations | 950,473 | 1,025,355 |
Financing obligations | 2,727,250 | 2,929,483 |
Deferred income taxes | 6,465 | 7,584 |
Self-insurance reserves | 429,626 | 436,560 |
Liabilities held for sale | 105,807 | |
Other long-term liabilities | 99,559 | 119,484 |
Commitments and contingencies | ||
Stockholders’ deficit: | ||
Additional paid-in-capital | 267,882 | 290,573 |
Accumulated deficit | (1,540,875) | (1,374,597) |
Accumulated other comprehensive loss | (565) | (362) |
Total stockholders’ deficit before noncontrolling interests | (1,273,396) | (1,084,227) |
Noncontrolling interests | (665,335) | (595,905) |
Total stockholders' deficit | (1,938,731) | (1,680,132) |
Total liabilities and stockholders’ deficit | 4,391,374 | 4,787,865 |
Class A Common Stock | ||
Stockholders’ deficit: | ||
Common stock | 101 | 97 |
Class B Common Stock | ||
Stockholders’ deficit: | ||
Common stock | 1 | 1 |
Class C Common Stock | ||
Stockholders’ deficit: | ||
Common stock | $ 60 | $ 61 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Allowance for doubtful accounts | $ 313,357 | |
Other assets: | ||
Accumulated depreciation on property and equipment | $ 952,205 | 939,155 |
Accumulated amortization on intangible assets | $ 97,242 | $ 88,336 |
Class A Common Stock | ||
Stockholders’ deficit: | ||
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) | 101,126,081 | 97,100,738 |
Common stock, shares, outstanding (in shares) | 101,126,081 | 97,100,738 |
Class B Common Stock | ||
Stockholders’ deficit: | ||
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 | 744,396 |
Common stock, shares, outstanding (in shares) | 744,396 | 744,396 |
Class C Common Stock | ||
Stockholders’ deficit: | ||
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) | 59,700,801 | 61,561,393 |
Common stock, shares, outstanding (in shares) | 59,700,801 | 61,561,393 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||
Net revenues | $ 1,217,271 | $ 1,315,452 | $ 3,790,703 | $ 4,045,860 |
Salaries, wages and benefits | 680,604 | 739,404 | 2,122,128 | 2,303,300 |
Other operating expenses | 371,064 | 400,086 | 1,125,779 | 1,162,223 |
General and administrative costs | 35,482 | 41,420 | 114,404 | 127,657 |
Lease expense | 32,366 | 38,670 | 97,548 | 113,004 |
Depreciation and amortization expense | 53,038 | 59,390 | 168,036 | 183,986 |
Interest expense | 115,695 | 124,431 | 348,687 | 373,473 |
Loss on early extinguishment of debt | 9,785 | 2,301 | ||
Investment income | (2,178) | (1,596) | (4,856) | (4,097) |
Other (income) loss | (20,207) | 2,379 | (42,360) | 15,602 |
Transaction costs | 11,361 | 1,056 | 26,567 | 7,862 |
Customer receivership and other related charges | 297 | 35,864 | ||
Long-lived asset impairments | 32,390 | 163,364 | 88,008 | 163,364 |
Goodwill and identifiable intangible asset impairments | 929 | 360,046 | 2,061 | 360,046 |
Equity in net (income) loss of unconsolidated affiliates | (152) | (69) | 106 | (291) |
Loss before income tax (benefit) expense | (93,121) | (613,426) | (265,190) | (798,434) |
Income tax (benefit) expense | (1,220) | 1,596 | (1,759) | 5,683 |
Loss from continuing operations | (91,901) | (615,022) | (263,431) | (804,117) |
Loss from discontinued operations, net of taxes | (2) | (70) | ||
Net loss | (91,901) | (615,024) | (263,431) | (804,187) |
Less net loss attributable to noncontrolling interests | 33,773 | 241,200 | 97,153 | 314,446 |
Net loss attributable to Genesis Healthcare, Inc. | $ (58,128) | $ (373,824) | $ (166,278) | $ (489,741) |
Basic and Diluted: | ||||
Weighted-average shares outstanding for loss from continuing operations per share | 102,489 | 94,940 | 100,461 | 93,376 |
Net loss per common share: | ||||
Loss from continuing operations attributable to Genesis Healthcare, Inc. | $ (0.57) | $ (3.94) | $ (1.66) | $ (5.24) |
Net loss attributable to Genesis Healthcare, Inc. | $ (0.57) | $ (3.94) | $ (1.66) | $ (5.24) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net loss | $ (91,901) | $ (615,024) | $ (263,431) | $ (804,187) |
Net unrealized (loss) gain on marketable securities, net of tax | (468) | 134 | (1,079) | 160 |
Comprehensive loss | (92,369) | (614,890) | (264,510) | (804,027) |
Less: comprehensive loss attributable to noncontrolling interests | 33,945 | 241,147 | 98,029 | 314,373 |
Comprehensive loss attributable to Genesis Healthcare, Inc. | $ (58,424) | $ (373,743) | $ (166,481) | $ (489,654) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities | ||
Net loss | $ (263,431) | $ (804,187) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Non-cash interest and leasing arrangements, net | 55,128 | 51,049 |
Other non-cash (gains) charges, net | (42,360) | 15,602 |
Share based compensation | 6,732 | 7,206 |
Depreciation and amortization expense | 168,036 | 183,986 |
Provision for losses on accounts receivable | 6,179 | 72,700 |
Equity in net loss (income) of unconsolidated affiliates | 106 | (291) |
(Benefit) provision for deferred taxes | (2,305) | 3,658 |
Customer receivership and other related charges | 35,864 | |
Long-lived asset impairments | 88,008 | 163,364 |
Goodwill and identifiable intangible asset impairments | 2,061 | 360,046 |
Loss on early extinguishment of debt | 9,300 | 2,301 |
Changes in assets and liabilities: | ||
Accounts receivable | 48,667 | (52,572) |
Accounts payable and other accrued expenses and other | (62,055) | 28,632 |
Net cash provided by operating activities | 14,066 | 67,358 |
Cash flows from investing activities: | ||
Capital expenditures | (41,321) | (48,465) |
Purchases of marketable securities | (63,534) | (23,201) |
Proceeds on maturity or sale of marketable securities | 50,913 | 46,210 |
Sales of assets | 79,307 | |
Other, net | (935) | (484) |
Net cash (used in) provided by investing activities | (54,877) | 53,367 |
Cash flows from financing activities: | ||
Borrowings under revolving credit facilities | 2,987,000 | 478,000 |
Repayments under revolving credit facilities | (2,959,875) | (509,650) |
Proceeds from issuance of long-term debt | 563,747 | 23,872 |
Proceeds from tenant improvement draws under lease arrangements | 6,083 | |
Repayment of long-term debt | (462,063) | (109,798) |
Debt issuance costs | (16,678) | (4,402) |
Debt settlement costs | (485) | |
Distributions to noncontrolling interests and stockholders | (1,373) | (1,680) |
Net cash provided by (used in) financing activities | 110,273 | (117,575) |
Net increase in cash, cash equivalents and restricted cash and equivalents | 69,462 | 3,150 |
Cash, cash equivalents and restricted cash and equivalents: | ||
Beginning of period | 58,638 | 63,460 |
End of period | 128,100 | 66,610 |
Supplemental cash flow information: | ||
Interest paid | 292,545 | 325,229 |
Net taxes paid (refunded) | 3,019 | (1,810) |
Non-cash investing and financing activities: | ||
Capital lease obligations, net (write-down) gross-up due to lease activity | (83,390) | (14,909) |
Assets subject to capital lease obligations, net write-down (gross-up) due to lease activity | (64,456) | (14,909) |
Financing obligations, net (write-down) gross-up due to lease activity | 18,279 | |
Financing obligations, net (write-down) gross-up due to lease activity | (177,001) | |
Assets subject to financing obligations, net write-down (gross-up) due to lease activity | $ 128,256 | $ (18,279) |
General Information
General Information | 9 Months Ended |
Sep. 30, 2018 | |
General Information | |
General Information | (1) General Informatio 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, 2018, the Company provides inpatient services through 445 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. 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 VIEs was not material at September 30, 2018. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q 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, 2017 filed with the U.S. Securities and Exchange Commission (the SEC) on Form 10-K on March 16, 2018. Certain prior year disclosure amounts have been reclassified to conform to current period presentation. Restricted cash had previously been included in restricted cash and investments in marketable securities. As a result of recently adopted accounting pronouncements, discussed subsequently, restricted cash is now presented separately on the Company’s consolidated balance sheets. The provision for losses on accounts receivable has been combined with other operating expenses and general and administrative costs, on the consolidated statement of operations. See Note 4 – “ Net Revenues and Accounts Receivable. ” Financial Condition and Liquidity Considerations The accompanying consolidated financial statements have been prepared on the basis that 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 9, 2018). 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 9, 2019. Based upon such considerations, management determined that the Company is able to continue as a going concern for 12 months following the date of issuance of these financial statements (November 9, 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 2017. In response to these issues, the Company entered into a number of agreements, amendments and new financing facilities (the Restructuring Transactions) during the nine months ended September 30, 2018. See Note 3 – “ Significant Transactions and Events – Restructuring Transactions .” In total, these agreements and amendments are estimated to reduce the Company’s annual cash fixed charges by approximately $62.0 million beginning January 1, 2018. The new financing agreements provided $70.0 million of additional cash and borrowing availability, increasing the Company’s liquidity and financial flexibility. In connection with the Restructuring Transactions, the Company entered into a new asset based lending facility agreement, replacing its prior revolving credit facilities (the Revolving Credit Facilities) and eliminating its forbearance agreement. Also in connection with the Restructuring Transactions, the Company amended the financial covenants in all of its material loan agreements and all but two of its material master leases. Financial covenants beginning in 2018 were amended to account for changes in the Company’s capital structure as a result of the Restructuring Transactions and to account for the current business climate. The Company received waivers from the counterparties to two of its material master leases, for which agreements to amend financial covenants were not attained, with respect to compliance with financial covenants. Recently Adopted Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers and all related amendments (ASC 606), which serves to supersede most existing revenue recognition guidance, including guidance specific to the healthcare industry. ASC 606 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 Company adopted ASC 606 effective January 1, 2018 using the modified retrospective transition method. There was no cumulative effect on the opening balance of accumulated deficit as a result of adopting the standard as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. See Note 4 – “ Net Revenues and Accounts Receivable. ” 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 Company adopted the new guidance effective January 1, 2018. The adoption of ASU 2016-01 did not have a material impact on the Company’s consolidated financial condition and results of operations. 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 Company adopted the new guidance effective January 1, 2018. Upon assessment of the cash flow issues subject to amendment, the adoption of ASU 2016-15 did not 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 (Topic 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 Company adopted the new guidance effective January 1, 2018. To better accommodate the adoption of ASU 2016-18, the Company has elected to separately disclose restricted cash on its consolidated balance sheets for all periods presented. The adoption of ASU 2016-18 did not 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 (Topic 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 Company adopted the new guidance effective January 1, 2018. 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. In March 2018, the FASB issued ASU 2018-05, Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 . The amendments in this update provide guidance on when to record and disclose provisional amounts for certain income tax effects of the Tax Reform Act. The amendments also require any provisional amounts or subsequent adjustments to be included in net income from continuing operations. Additionally, this ASU discusses required disclosures that an entity must make with regard to the Tax Reform Act. This ASU is effective immediately as new information is available to adjust provisional amounts that were previously recorded. The Company has adopted this standard as of January 1, 2018 and will continue to evaluate indicators that may give rise to a change in its tax provision as a result of the Tax Reform Act. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02), which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842 ; ASU No. 2018-10, Codification Improvements to Topic 842, Leases ; and ASU No. 2018-11, Targeted Improvements . The new standard establishes a right-of-use (ROU) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations. The new standard is effective for the Company on January 1, 2019, with early adoption permitted. The Company expects to adopt the new standard on its effective date. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. The Company expects to adopt the new standard on January 1, 2019 and use the effective date as the date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. The new standard provides a number of optional practical expedients in transition. The Company expects to elect the ‘package of practical expedients’, which permit it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company does not expect to elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter is not applicable to the Company. The Company expects that this standard will have a material effect on its financial statements. While the Company will continue to assess all of the effects of adoption, it currently believes the most significant effects relate to (1) the recognition of new ROU assets and lease liabilities on its balance sheet for real estate operating leases; (2) the derecognition of existing assets and liabilities for certain sale-leaseback transactions (including those arising from build-to-suit lease arrangements for which construction is complete and the Company is leasing the constructed asset) that currently do not qualify for sale accounting; and (3) providing significant new disclosures about its leasing activities. The Company does not expect a significant change in its leasing activities between now and adoption. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company currently expects to elect the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which permits entities to reclassify the disproportionate income tax effects of the Tax Cuts and Jobs Act (Tax Reform Act) on items within accumulated other comprehensive income (loss) to retained earnings. These disproportionate income tax effect items are referred to as "stranded tax effects." Amendments in this update only relate to the reclassification of the income tax effects of the Tax Reform Act. Other accounting guidance that requires the effect of changes in tax laws or rates to be included in net income from continuing operations is not affected by this update. ASU 2018-02 is effective for the Company beginning January 1, 2019 and should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Reform Act is recognized. The adoption of ASU 2018-02 will not have a material impact on the Company’s consolidated financial statements. |
Certain Significant Risks and U
Certain Significant Risks and Uncertainties | 9 Months Ended |
Sep. 30, 2018 | |
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, insurance, private 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, 2018 and 2017: Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Medicare 21 % 22 % 22 % 23 % Medicaid 58 % 57 % 57 % 56 % Insurance 12 % 12 % 12 % 12 % Private 8 % 8 % 8 % 8 % Other 1 % 1 % 1 % 1 % 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 $56.8 million, approximately 52%, of the net outstanding contract receivables in the rehabilitation services business at September 30, 2018. One customer, which is a related party of the Company, comprises $30.1 million, approximately 28%, of the net outstanding contract receivables in the rehabilitation services business at September 30, 2018. See Note 16 – “Related Party Transactions.” An adverse event impacting the solvency of these large customers resulting in their insolvency or other economic distress would have a material impact on the Company. 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, 2017, which was filed with the SEC on March 16, 2018, and in the Company’s Quarterly Reports on Form 10-Q, including the risk factors discussed herein in Part II. Item 1A. Covenant Compliance Should the Company fail to comply with its debt and lease covenants at a future measurement date, it could, absent necessary and timely waivers and/or amendments, be in default under certain of its existing debt and lease agreements. To the extent any cross-default provisions may apply, the default could have an even more significant impact on the Company’s financial position. Although the Company is in compliance, and projects to remain in compliance, with the covenants required by its material debt and lease agreements, the ongoing uncertainty related to the impact of healthcare reform initiatives may have an adverse impact on the Company’s ability to remain in compliance with its covenants. Such uncertainty includes changes in reimbursement patterns, patient admission patterns, bundled payment arrangements, as well as potential changes to the Patient Protection and Affordable Care Act of 2010 currently being considered in Congress, among others. The Company’s ability to maintain compliance with covenants required by its debt and lease agreements depends in part on management’s ability to increase revenues 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 debt and lease covenant requirements. There can be no assurance that the confluence of these and other factors will not impede the Company’s ability to meet covenants required by its debt and lease agreements in the future. |
Significant Transactions and Ev
Significant Transactions and Events | 9 Months Ended |
Sep. 30, 2018 | |
Significant Transactions And Events | |
Significant Transactions and Events | (3) Significant Transactions and Events Restructuring Transactions Overview In the first quarter of 2018, the Company entered into a number of agreements, amendments and new financing facilities, further described below, in an effort to strengthen significantly its capital structure. In total, the Restructuring Transactions are estimated to reduce the Company’s annual cash fixed charges by approximately $62.0 million beginning in 2018 and provided $70.0 million of additional cash and borrowing availability, increasing the Company’s liquidity and financial flexibility. In connection with the Restructuring Transactions, the Company entered into a new asset based lending facility agreement, replacing its prior Revolving Credit Facilities, expanding its term loan borrowings, amending its real estate loans with Welltower Inc. (Welltower) while refinancing some of those loan amounts through new real estate loans. The new asset based lending facility agreement and real estate loans are financed through MidCap Funding IV Trust and MidCap Financial Trust (collectively, MidCap), respectively. For further information on these debt refinancings, see Note 8 – “ Long-Term Debt .” Also in connection with the Restructuring Transactions, the Company amended the financial covenants in all of its material loan agreements and all but two of its material master leases. Financial covenants beginning in 2018 were amended to account for changes in the Company’s capital structure as a result of the Restructuring Transactions and to account for the current business climate. Welltower Master Lease Amendment On February 21, 2018, the Company entered into a definitive agreement with Welltower to amend the Welltower Master Lease (the Welltower Master Lease Amendment). The Welltower Master Lease Amendment reduces the Company’s annual base rent payment by $35.0 million effective retroactively as of January 1, 2018, reduces the annual rent escalator from approximately 2.9% to 2.5% on April 1, 2018 and further reduces the annual rent escalator to 2.0% beginning January 1, 2019. In addition, the Welltower Master Lease Amendment extends the initial term of the master lease by five years to January 31, 2037 and extends the renewal term of the master lease by five years to December 31, 2048. The Welltower Master Lease Amendment also provides a potential upward rent reset, conditioned upon achievement of certain upside operating metrics, effective January 1, 2023. If triggered, the incremental rent from the rent reset is capped at $35.0 million. Omnibus Agreement On February 21, 2018, the Company entered into an Omnibus Agreement with Welltower and Omega Healthcare Investors, Inc. (Omega), pursuant to which Welltower and Omega committed to provide up to $40.0 million in new term loans and amend the current term loan agreement to, among other things, accommodate a refinancing of the Company’s existing asset based credit facility, in each case subject to certain conditions, including the completion of a restructuring of certain of the Company’s other material debt and lease obligations. The Omnibus Agreement also provides that upon satisfying certain conditions, including raising new capital that is used to pay down certain indebtedness owed to Welltower and Omega, (a) $50.0 million of outstanding indebtedness owed to Welltower will be written off and (b) the Company may request conversion of not more than $50.0 million of the outstanding balance of the Company’s Welltower Real Estate Loans into equity. If the proposed equity conversion would result in any adverse REIT qualification, status or compliance consequences to Welltower, then the debt that would otherwise be converted to equity shall instead be converted into a loan incurring paid in kind interest at 2% per annum compounded quarterly, with a term of ten years commencing on the date the applicable conditions precedent to the equity conversion have been satisfied. Moreover, the Company agreed to support Welltower in connection with the sale of certain of Welltower’s interests in facilities covered by the Welltower Master Lease, including negotiating and entering into definitive new master lease agreements with third party buyers. In connection with the Omnibus Agreement, the Company agreed to issue warrants to Welltower and Omega to purchase 900,000 shares and 600,000 shares, respectively, of the Company’s Class A Common Stock at an exercise price equal to $1.33 per share. Issuance of the warrant to Welltower is subject to the satisfaction of certain conditions. The warrants may be exercised at any time during the period commencing six months from the date of issuance and ending five years from the date of issuance. Lease Transactions and Divestitures Sabra Divestitures On April 1, 2018, the Company divested five skilled nursing facilities. All five of the skilled nursing facilities, three located in Massachusetts and two located in Kentucky, were terminated from their respective master lease agreements with Sabra Health Care REIT, Inc. (Sabra). The five skilled nursing facilities generated annual revenues of $28.5 million and pre-tax net loss of $2.9 million. On May 4, 2018, Sabra completed the sale and lease termination of one skilled nursing facility in California that had been closed in 2017. The Company recognized a net gain on the write off of certain lease liabilities, offset by exit costs, of $0.7 million on the six skilled nursing facilities. On June 1, 2018, Sabra completed the sale and lease termination of 12 skilled nursing facilities, five located in Florida and seven located in New Hampshire. As a result of the sale, the Company will receive an annual rent credit of $12.0 million for the remainder of the lease term. The Company continues to operate these facilities under a new lease with a new landlord, Next Healthcare. See Note 16 – “ Related Party Transactions. ” As a result of the sale, the Company recognized accelerated depreciation expense of $6.0 million on the property and equipment sold and a gain on the write off of certain lease liabilities of $7.0 million. On June 29, 2018, Sabra completed the sale and lease termination of eight skilled nursing facilities and one assisted/senior living facility located in seven different states. As a result of the sale, the Company will receive an annual rent credit of $7.4 million for the remainder of the lease term. The Company continues to operate these facilities under a lease agreement with a new landlord. The new lease has a ten-year initial term, one five-year renewal option and initial annual rent of $7.4 million. As a result of the sale, the Company recognized accelerated depreciation expense of $3.6 million on the property and equipment sold and a gain on the write off of certain lease liabilities of $2.9 million. On September 7, 2018, Sabra completed the sale and lease termination of one skilled nursing facility located in Ohio. The skilled nursing facility generated annual revenues of $3.2 million and pre-tax net loss of $0.8 million. As a result of the sale, the Company will receive an annual rent credit of $0.6 million. The costs associated with this sale and lease termination were de minimis. Second Spring Divestitures On June 1, 2018 and on June 13, 2018, Second Spring Healthcare Investments (Second Spring) completed the sale and lease termination of eight skilled nursing facilities located in Pennsylvania and four skilled nursing facilities located in New Jersey. The combined 12 skilled nursing facilities generated annual revenues of $146.2 million and pre-tax net loss of $19.3 million. As a result of the sale and lease termination, the Company recognized a capital lease net asset and obligation write-down of $16.8 million, a financing obligation net asset write-down of $113.3 million and a financing obligation write-down of $134.5 million. The resulting gain of $21.2 million was offset by $6.3 million of exit costs and the Company recognized accelerated depreciation expense of $5.3 million on the property and equipment sold. On August 1, 2018, Second Spring completed the sale and lease termination of one skilled nursing facility located in Pennsylvania. The skilled nursing facility generated annual revenues of $15.7 million and pre-tax net loss of $1.9 million. As a result of the sale and lease termination, the Company recognized a financing obligation net asset and a financing obligation write-down of $12.8 million. In addition, the Company recognized exit costs of $0.8 million and accelerated depreciation expense of $0.8 million on the property and equipment sold. Welltower Divestitures On August 1, 2018, Welltower completed the sale and lease termination of three skilled nursing facilities located in Maryland and Indiana. The three skilled nursing facilities generated annual revenues of $40.1 million and pre-tax net loss of $4.5 million. As a result of the sale and lease termination, the Company recognized a capital lease and financing obligation net asset write-down of $31.7 million, a capital lease obligation and financing obligation write-down of $64.2 million. The resulting gain of $31.7 million was offset by $2.0 million of exit costs. In addition, the Company recognized accelerated depreciation expense of $6.5 million on the property and equipment sold. Texas Divestitures On August 1, 2018, the Company terminated a lease and exited the operations of one skilled nursing facility in Texas. The skilled nursing facility generated annual revenues of $8.2 million and pre-tax net loss of $2.0 million. The Company incurred lease termination costs of $3.5 million and exit costs of $0.3 million in the divestiture of this skilled nursing facility. On October 1, 2018, the Company sold 16 skilled nursing facilities in Texas that are classified as assets held for sale on September 30, 2018. In advance of the sale, the Company recorded exit costs of $4.8 million associated with the divestiture of these skilled nursing facilities. Other Lease Amendments and Divestitures For the nine months ended September 30, 2018, the Company divested or amended the lease agreements to six other skilled nursing facilities. The lease agreement to one behavioral outpatient clinic expired on June 30, 2018. As a result of these lease amendments and divestitures, the Company recognized a loss for exit costs and the write off of certain lease assets of $3.5 million. In total for the nine months ended September 30, 2018, the Company recorded a net gain on lease transactions and divestitures of $42.4 million which is included in other (income) loss on the consolidated statements of operations. |
Net Revenues and Accounts Recei
Net Revenues and Accounts Receivable | 9 Months Ended |
Sep. 30, 2018 | |
Net Revenues and Accounts Receivable | |
Net Revenues and Accounts Receivable | (4) Net Revenues and Accounts Receivable Revenue Streams Inpatient Services The Company generates revenues primarily by providing services to patients within its facilities. The Company uses interdisciplinary teams of experienced medical professionals to provide services prescribed by physicians. These teams include registered nurses, licensed practical nurses, certified nursing assistants and other professionals who provide individualized comprehensive nursing care. Many of the Company’s facilities are equipped to provide specialty care, such as on-site dialysis, ventilator care, cardiac and pulmonary management, as well as standard services, such as room and board, special nutritional programs, social services, recreational activities and related healthcare and other services. The Company assesses collectibility on all accounts prior to providing services. Rehabilitation Therapy Services The Company generates revenues by providing rehabilitation therapy services, including speech-language pathology, physical therapy, occupational therapy and respiratory therapy at its skilled nursing facilities and assisted/senior living facilities, as well as facilities of third-party skilled nursing operators and other outpatient settings. The majority of revenues generated by rehabilitation therapy services rendered are billed to contracted third party providers. Other Services The Company generates revenues by providing an array of other specialty medical services, including physician services, staffing services, and other healthcare related services. Revenue Recognition The Company generates revenues, primarily by providing healthcare services to its customers. Revenues are recognized when control of the promised good or service is transferred to our customers, in an amount that reflects the consideration to which the Company expects to be entitled from patients, third-party payers (including government programs and insurers) and others, in exchange for those goods and services. Performance obligations are determined based on the nature of the services provided. The majority of the Company’s healthcare services represent a bundle of services that are not capable of being distinct and as such, are treated as a single performance obligation satisfied over time as services are rendered. The Company also provides certain ancillary services which are not included in the bundle of services, and as such, are treated as separate performance obligations satisfied at a point in time, if and when those services are rendered. The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration, such as implicit price concessions. The Company utilizes the expected value method to determine the amount of variable consideration that should be included to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. Variable consideration also exists in the form of settlements with Medicare and Medicaid as a result of retroactive adjustments due to audits and reviews. The Company applies constraint to the transaction price, such that net revenues are recorded only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in the future. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net revenues in the period such variances become known. Adjustments arising from a change in the transaction price were not significant for the three and nine months ended September 30, 2018. The Company has elected a practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component due to its expectation that the period between the time the service is provided and the time payment is received will be one year or less. Adoption of ASC 606 The Company’s adoption of ASC 606 primarily impacts the presentation of revenues due to the inclusion of variable consideration in the form of implicit price concessions contained in certain of its contracts with customers. Under ASC 606, amounts estimated to be uncollectable are generally considered implicit price concessions that are a direct reduction to net revenues. Prior to adoption of ASC 606, such amounts were classified as provision for losses on accounts receivable. For the three and nine months ended September 30, 2018, the Company recorded approximately $20.6 million and $67.4 million, respectively, of implicit price concessions as a direct reduction of net revenues that would have been recorded as operating expenses prior to the adoption of ASC 606. The adoption of ASC 606 is not expected to have a material impact on net income on an ongoing basis. To the extent there are material subsequent events that affect the payor's ability to pay, such amounts are recorded within operating expenses. At September 30, 2018, the remaining balance of allowance for doubtful accounts previously disclosed on the consolidated balance sheets relating to accounts receivable with service dates of December 31, 2017 and prior is $198.8 million. The Company has reclassified the provision for losses on accounts receivable of $25.2 million and $72.7 million for the three and nine months ended September 30, 2017, respectively , to other operating expenses in the consolidated statements of operations. These reclassifications had no effect on the reported results of operations. Under ASC 606, the Company recognizes revenue in the statements of operations and contract assets on the consolidated balance sheets only when services have been provided. Since the Company has performed its obligation under the contract, it has unconditional rights to the consideration recorded as contract assets and therefore classifies those billed and unbilled contract assets as accounts receivable. Under ASC 606, payments that the Company receives from customers in advance of providing services represent contract liabilities. Such payments primarily relate to private pay patients, which are billed monthly in advance. The Company had no material contract liabilities or activity as of and for the three and nine months ended September 30, 2018. Disaggregation of Revenues The Company disaggregates revenue from contracts with customers by reportable operating segments and payor type. The Company notes that disaggregation of revenue into these categories achieves the disclosure objectives to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The payment terms and conditions within the Company's revenue-generating contracts vary by contract type and payor source. Payments are generally received within 30 to 60 days after billing. See Note 6 – “ Segment Information .” The composition of net revenues by payor type and operating segment for the three and nine months ended September 30, 2018 and 2017 are as follows (in thousands): Three months ended September 30, 2018 Rehabilitation Inpatient Therapy Other Services Services Services Total Medicare $ 216,382 $ 22,756 $ — $ 239,138 Medicaid 613,539 545 — 614,084 Insurance 125,060 5,412 — 130,472 Private 85,148 139 — 85,287 Third party providers — 99,851 17,995 117,846 Other 14,539 3,461 12,444 30,444 Total net revenues $ 1,054,668 $ 132,164 $ 30,439 $ 1,217,271 Three months ended September 30, 2017 (4) Rehabilitation Inpatient Therapy Other Services Services Services Total Medicare $ 248,436 $ 22,761 $ — $ 271,197 Medicaid 641,378 541 — 641,919 Insurance 118,356 6,032 — 124,388 Private 96,583 143 — 96,726 Third party providers — 118,478 21,385 139,863 Other 24,882 3,943 12,534 41,359 Total net revenues $ 1,129,635 $ 151,898 $ 33,919 $ 1,315,452 (1) Includes Assisted/Senior living revenue of $24.0 million and $24.2 million for the three months ended September 30, 2018 and 2017, respectively. Such amounts do not represent contracts with customers under ASC 606. (2) Primarily consists of revenue from Veteran Affairs and administration of third party facilities. (3) Includes net revenues from all payors generated by the other services, excluding third party providers. (4) The Company adopted the new revenue standard using the modified retrospective transition method. As a result, the prior period amounts have not been adjusted. Nine months ended September 30, 2018 Rehabilitation Inpatient Therapy Other Services Services Services Total Medicare $ 700,202 $ 68,861 $ — $ 769,063 Medicaid 1,854,706 1,584 — 1,856,290 Insurance 400,889 18,020 — 418,909 Private 258,887 391 — 259,278 Third party providers — 319,015 63,500 382,515 Other 50,924 13,911 39,813 104,648 Total net revenues $ 3,265,608 $ 421,782 . $ 103,313 $ 3,790,703 Nine months ended September 30, 2017 (4) Rehabilitation Inpatient Therapy Other Services Services Services Total Medicare $ 793,641 $ 70,831 $ — $ 864,472 Medicaid 1,912,130 1,137 — 1,913,267 Insurance 417,619 18,358 — 435,977 Private 293,455 500 — 293,955 Third party providers — 353,026 70,051 423,077 Other 65,300 12,154 37,658 115,112 Total net revenues $ 3,482,145 $ 456,006 $ 107,709 $ 4,045,860 (1) Includes Assisted/Senior living revenue of $71.2 million and $72.3 million for the nine months ended September 30, 2018 and 2017, respectively. Such amounts do not represent contracts with customers under ASC 606. (2) Primarily consists of revenue from Veteran Affairs and administration of third party facilities. (3) Includes net revenues from all payors generated by the other services, excluding third party providers. (4) The Company adopted the new revenue standard using the modified retrospective transition method. As a result, the prior period amounts have not been adjusted. |
Loss Per Share
Loss Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Loss Per Share | |
Loss Per Share | (5) 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 Operations Investment, LLC (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, 2018 2017 2018 2017 Numerator: Loss from continuing operations $ (91,901) $ (615,022) $ (263,431) $ (804,117) Less: Net loss attributable to noncontrolling interests (33,773) (241,200) (97,153) (314,446) Loss from continuing operations attributable to Genesis Healthcare, Inc. $ (58,128) $ (373,822) $ (166,278) $ (489,671) Loss from discontinued operations, net of taxes — (2) — (70) Net loss attributable to Genesis Healthcare, Inc. $ (58,128) $ (373,824) $ (166,278) $ (489,741) Denominator: Weighted-average shares outstanding for basic and diluted net loss per share 102,489 94,940 100,461 93,376 Basic and diluted net loss per common share: Loss from continuing operations attributable to Genesis Healthcare, Inc. $ (0.57) $ (3.94) $ (1.66) $ (5.24) Loss from discontinued operations, net of taxes — — — — Net loss attributable to Genesis Healthcare, Inc. $ (0.57) $ (3.94) $ (1.66) $ (5.24) The following shares were excluded from the computation of diluted net loss per common share in the three and nine months ended September 30, 2018 and 2017, as their inclusion would have been anti-dilutive (in thousands): Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Exchange of noncontrolling interests 59,711 61,692 60,289 62,108 Employee and director unvested restricted stock units 266 40 691 988 Convertible note — 3,000 — 3,000 Stock warrants 1,500 — 1,359 — 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 stock warrants are anti-dilutive to EPS because the Company is in a net loss position for the three and nine months ended September 30, 2018. As of September 30, 2018, there were 59.7 million units attributable to the noncontrolling interests outstanding. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2018 | |
Segment Information | |
Segment Information | (6) 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, 2018 2017 Increase / (Decrease) Revenue Revenue Revenue Revenue Dollars Percentage Dollars Percentage Dollars Percentage Revenues: Inpatient services: Skilled nursing facilities $ 1,029,453 84.6 % $ 1,103,554 83.8 % $ (74,101) (6.7) % Assisted/Senior living facilities 23,974 2.0 % 24,185 1.8 % (211) (0.9) % Administration of third party facilities 2,025 0.2 % 2,266 0.2 % (241) (10.6) % Elimination of administrative services (784) (0.1) % (370) — % (414) 111.9 % Inpatient services, net 1,054,668 86.7 % 1,129,635 85.8 % (74,967) (6.6) % Rehabilitation therapy services: Total therapy services 214,421 17.6 % 244,471 18.6 % (30,050) (12.3) % Elimination intersegment rehabilitation therapy services (82,257) (6.8) % (92,573) (7.0) % 10,316 (11.1) % Third party rehabilitation therapy services 132,164 10.8 % 151,898 11.6 % (19,734) (13.0) % Other services: Total other services 46,977 3.9 % 42,901 3.3 % 4,076 9.5 % Elimination intersegment other services (16,538) (1.4) % (8,982) (0.7) % (7,556) 84.1 % Third party other services 30,439 2.5 % 33,919 2.6 % (3,480) (10.3) % Net revenues $ 1,217,271 100.0 % $ 1,315,452 100.0 % $ (98,181) (7.5) % Nine months ended September 30, 2018 2017 Increase / (Decrease) Revenue Revenue Revenue Revenue Dollars Percentage Dollars Percentage Dollars Percentage Revenues: Inpatient services: Skilled nursing facilities $ 3,190,065 84.0 % $ 3,404,181 84.0 % $ (214,116) (6.3) % Assisted/Senior living facilities 71,220 1.9 % 72,262 1.8 % (1,042) (1.4) % Administration of third party facilities 6,577 0.2 % 6,841 0.2 % (264) (3.9) % Elimination of administrative services (2,254) — % (1,139) — % (1,115) 97.9 % Inpatient services, net 3,265,608 86.1 % 3,482,145 86.0 % (216,537) (6.2) % Rehabilitation therapy services: Total therapy services 685,672 18.1 % 743,605 18.4 % (57,933) (7.8) % Elimination intersegment rehabilitation therapy services (263,890) (7.0) % (287,599) (7.1) % 23,709 (8.2) % Third party rehabilitation therapy services 421,782 11.1 % 456,006 11.3 % (34,224) (7.5) % Other services: Total other services 146,830 3.9 % 133,168 3.3 % 13,662 10.3 % Elimination intersegment other services (43,517) (1.1) % (25,459) (0.6) % (18,058) 70.9 % Third party other services 103,313 2.8 % 107,709 2.7 % (4,396) (4.1) % Net revenues $ 3,790,703 100.0 % $ 4,045,860 100.0 % $ (255,157) (6.3) % A summary of the Company’s unaudited condensed consolidated statement of operations follows (in thousands): Three months ended September 30, 2018 Rehabilitation Inpatient Therapy Other Services Services Services Corporate Eliminations Consolidated Net revenues $ 1,055,452 $ 214,421 $ 46,914 $ 63 $ (99,579) $ 1,217,271 Salaries, wages and benefits 480,345 175,098 25,161 — — 680,604 Other operating expenses 428,398 12,891 29,353 — (99,578) 371,064 General and administrative costs — — — 35,482 — 35,482 Lease expense 31,732 — 316 318 — 32,366 Depreciation and amortization expense 46,472 3,147 172 3,247 — 53,038 Interest expense 91,106 14 9 24,566 — 115,695 Investment income — — — (2,178) — (2,178) Other income (20,207) — — — — (20,207) Transaction costs — — — 11,361 — 11,361 Long-lived asset impairments 32,390 — — — — 32,390 Goodwill and identifiable intangible asset impairments 929 — — — — 929 Equity in net (income) loss of unconsolidated affiliates — — — (523) 371 (152) (Loss) income before income tax benefit (35,713) 23,271 (8,097) (72,210) (372) (93,121) Income tax benefit — — — (1,220) — (1,220) (Loss) income from continuing operations $ (35,713) $ 23,271 $ (8,097) $ (70,990) $ (372) $ (91,901) 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 464,894 21,429 15,689 — (101,926) 400,086 General and administrative costs — — — 41,420 — 41,420 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 and other related charges — 297 — — — 297 Long-lived asset impairment charges 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 expense (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) Nine months ended September 30, 2018 Rehabilitation Inpatient Therapy Other Services Services Services Corporate Eliminations Consolidated Net revenues $ 3,267,862 $ 685,672 $ 146,714 $ 116 $ (309,661) $ 3,790,703 Salaries, wages and benefits 1,477,153 562,875 82,100 — — 2,122,128 Other operating expenses 1,323,423 41,707 70,310 — (309,661) 1,125,779 General and administrative costs — — — 114,404 — 114,404 Lease expense 95,660 — 959 929 — 97,548 Depreciation and amortization expense 147,552 9,479 509 10,496 — 168,036 Interest expense 277,753 41 27 70,866 — 348,687 Loss on early extinguishment of debt — — — 9,785 — 9,785 Investment income — — — (4,856) — (4,856) Other (income) loss (42,438) — 78 — — (42,360) Transaction costs — — — 26,567 — 26,567 Long-lived asset impairments 88,008 — — — — 88,008 Goodwill and identifiable intangible asset impairments 2,061 — — — — 2,061 Equity in net (income) loss of unconsolidated affiliates — — — (1,029) 1,135 106 (Loss) income before income tax benefit (101,310) 71,570 (7,269) (227,046) (1,135) (265,190) Income tax benefit — — — (1,759) — (1,759) (Loss) income from continuing operations $ (101,310) $ 71,570 $ (7,269) $ (225,287) $ (1,135) $ (263,431) 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 1,365,896 65,074 45,451 — (314,198) 1,162,223 General and administrative costs — — — 127,657 — 127,657 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 early extinguishment of debt — — — 2,301 — 2,301 Investment income — — — (4,097) — (4,097) Other loss (income) 15,112 732 — (242) — 15,602 Transaction costs — — — 7,862 — 7,862 Customer receivership and other related charges — 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 expense (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) The following table presents the segment assets as of September 30, 2018 compared to December 31, 2017 (in thousands): September 30, 2018 December 31, 2017 Inpatient services $ 3,865,304 $ 4,303,370 Rehabilitation therapy services 341,139 351,711 Other services 42,161 50,127 Corporate and eliminations 142,770 82,657 Total assets $ 4,391,374 $ 4,787,865 The following table presents segment goodwill as of September 30, 2018 compared to December 31, 2017 (in thousands): Inpatient Rehabilitation Therapy Services Other Services Consolidated Balance at December 31, 2017 Goodwill 351,470 73,814 11,828 437,112 Accumulated impairment losses (351,470) — — (351,470) $ — $ 73,814 $ 11,828 $ 85,642 Balance at September 30, 2018 Goodwill 351,470 73,814 11,828 437,112 Accumulated impairment losses (351,470) — — (351,470) $ — $ 73,814 $ 11,828 $ 85,642 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2018 | |
Property and Equipment | |
Property and Equipment | (7) Property and Equipment Property and equipment consisted of the following as of September 30, 2018 and December 31, 2017 (in thousands): September 30, 2018 December 31, 2017 Land, buildings and improvements $ 472,553 $ 591,022 Capital lease land, buildings and improvements 684,225 752,657 Financing obligation land, buildings and improvements 2,283,764 2,525,551 Equipment, furniture and fixtures 420,335 453,230 Construction in progress 10,912 30,294 Gross property and equipment 3,871,789 4,352,754 Less: accumulated depreciation (952,205) (939,155) Net property and equipment $ 2,919,584 $ 3,413,599 At September 30, 2018, the Company classified the property and equipment of 23 skilled nursing facilities as assets held for sale resulting in a total net reduction of property and equipment of $99.7 million, which was primarily classified in the “Land, buildings and improvements” line item. See Note 15 – “ Assets Held for Sale.” In the nine months ended September 30, 2018, the Company amended one of its master lease agreements resulting in a net capital lease asset write-down of $18.2 million. See Note 3 – “ Significant Transactions and Events – Welltower Master Lease Amendment.” In the nine months ended September 30, 2018, Welltower completed the sale and lease termination of three skilled nursing facilities. The Company recognized a capital lease and financing obligation net asset write-down of $29.5 million and $2.2 million, respectively. See Note 3 – “ Significant Transactions and Events – Welltower Divestitures.” In the nine months ended September 30, 2018, the Company divested 13 skilled nursing facilities, which were terminated from their master lease agreement, resulting in a net financing obligation asset write-down of $126.1 million and capital lease asset write-down of $16.8 million. See Note 3 – “ Significant Transactions and Events – Second Spring Divestitures.” In the nine months ended September 30, 2018, the Company recognized impairment charges of $88.0 million on its property and equipment. See Note 14 – “Asset Impairment Charges - Long-Lived Assets with a Definite Useful Life.” |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2018 | |
Long-Term Debt. | |
Long-Term Debt | (8) Long-Term Debt Long-term debt at September 30, 2018 and December 31, 2017 consisted of the following (in thousands): September 30, 2018 December 31, 2017 Asset based lending facilities, net of debt issuance costs of $12,016 and $0 at September 30, 2018 and December 31, 2017, respectively $ 403,110 $ — Revolving credit facilities, net of debt issuance costs of $0 and $10,109 at September 30, 2018 and December 31, 2017, respectively — 303,091 Term loan agreements, net of debt issuance costs of $2,143 and $3,020 and debt premium balance of $10,670 and $0 at September 30, 2018 and December 31, 2017, respectively 183,043 120,706 Real estate loans, net of debt issuance costs of $5,381 and $3,486 and debt premium balance of $31,408 and $0 at September 30, 2018 and December 31, 2017, respectively 313,730 281,039 HUD insured loans, net of debt issuance costs of $5,280 and $5,590 and debt premium balance of $868 and $13,590 at September 30, 2018 and December 31, 2017, respectively 182,656 263,827 Notes payable 80,794 68,122 Mortgages and other secured debt (recourse) 13,857 12,536 Mortgages and other secured debt (non-recourse), net of debt issuance costs of $195 and $99 and debt premium balance of $1,544 and $1,618 at September 30, 2018 and December 31, 2017, respectively 26,835 27,978 1,204,025 1,077,299 Less: Current installments of long-term debt (116,077) (26,962) Long-term debt $ 1,087,948 $ 1,050,337 Asset Based Lending Facilities On March 6, 2018, the Company entered into a new asset based lending facility agreement with MidCap. The agreement provides for a $555 million asset based lending facility comprised of (a) a $325 million first lien term loan facility, (b) a $200 million first lien revolving credit facility and (c) a $30 million delayed draw term loan facility (collectively, the ABL Credit Facilities). The commitments under the delayed draw loan facility will be reduced to $20 million in the year 2020. Proceeds were used to replace and repay in full the Company’s existing $525 million Revolving Credit Facilities. The ABL Credit Facilities have a five-year term set to mature on March 6, 2023. The ABL Credit Facilities include a springing maturity clause that would accelerate its maturity 90 days prior to the maturity of the Term Loan Agreements, Welltower Real Estate Loans or MidCap Real Estate Loans, in the event those agreements are not extended or refinanced. The revolving credit facility includes a swinging lockbox arrangement whereby the Company transfers all funds deposited within its designated lockboxes to MidCap on a daily basis and then draws from the revolving credit facility as needed. In accordance with U.S. GAAP, the Company has presented the entire revolving credit facility borrowings balance of $90.1 million in current installments of long-term debt at September 30, 2018. Despite this classification, the Company expects that it will have the ability to borrow and repay on the revolving credit facility through its maturity on March 6, 2023. Cash proceeds of $56.3 million received under the ABL Credit Facilities remain in a restricted account. This amount is pledged to cash collateralize letters of credit previously issued under the Revolving Credit Facilities. The Company has classified this deposit and all cash account balances subject to deposit account control agreements that were sprung under the ABL Credit Facilities as restricted cash and equivalents on the consolidated balance sheets at September 30, 2018. Borrowings under the term loan and revolving credit facility components of the ABL Credit Facilities bear interest at a 90-day LIBOR rate (subject to a floor of 0.5%) plus an applicable margin of 6%. Borrowings under the delayed draw component bear interest at a 90-day LIBOR rate (subject to a floor of 1%) plus an applicable margin of 11%. Borrowing levels under the term loan and revolving credit facility components of the ABL Credit Facilities are limited to a borrowing base that is computed based upon the level of eligible accounts receivable. In addition to paying interest on the outstanding principal borrowed under the revolving credit facility, the Company is required to pay a commitment fee to the lenders for any unutilized commitments. The commitment fee rate equals 0.5% per annum on the revolving credit facility and 2% on the delayed draw term loan facility. The term loan facility and revolving credit facility include a termination fee equal to 2% if the loans are prepaid within the first year, 1% if the loans are prepaid after year one and before year two, and 0.5% thereafter. The term loan facility and revolving credit facility include an exit fee equal to $1.6 million and $1.0 million, respectively, due and payable on the earlier of the loans retirement or on the maturity date. The ABL Credit Facilities contain representations and warranties, affirmative covenants, negative covenants, financial covenants and events of default and security interests that are customarily required for similar financings. Financial covenants include a minimum consolidated fixed charge coverage ratio, a maximum leverage ratio and minimum liquidity. Borrowings and interest rates under the ABL Credit Facilities were as follows at September 30, 2018 (dollars in thousands): Weighted Average ABL Credit Facilities Commitment Borrowings Interest Term loan facility $ 325,000 $ 325,000 8.40 % Revolving credit facility (Non-HUD) 155,000 60,086 8.40 % Revolving credit facility (HUD) 45,000 30,039 8.40 % Delayed draw facility 30,000 — 13.40 % $ 555,000 $ 415,125 8.40 % As of September 30, 2018, the Company had a total borrowing base capacity of $456.6 million with outstanding borrowings under the ABL Credit Facilities of $415.1 million, leaving the Company with approximately $41.5 million of available borrowing capacity under the ABL Credit Facilities. Revolving Credit Facilities Prior to March 6, 2018, the Company’s Revolving Credit Facilities, as amended, consisted of a senior secured, asset-based revolving credit facility of up to $525.0 million under two separate tranches: Tranche A-1 and HUD Tranche and were set to mature on February 2, 2020. Interest accrued 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 was based on the level of commitments for both tranches, and in regards to LIBOR loans (i) for Tranche A-1 ranges from 3.00% to 3.50%; and (ii) for HUD Tranche ranges from 2.50% to 3.00%. The applicable margin was based on the level of commitments for both tranches, and in regards to base rate loans (i) for Tranche A-1 ranges from 2.00% to 2.50% and (ii) for HUD Tranche ranges from 2.00% to 2.50%. Term Loan Agreements The Company and certain of its affiliates, including FC-GEN (the Borrower) are party to a four-year term loan agreement (the Term Loan Agreement) with an affiliate of Welltower and an affiliate of Omega. The Term Loan Agreement originally provided 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. On March 6, 2018, the Company entered into an amendment to the Term Loans (the Term Loan Amendment) pursuant to which the Company borrowed an additional $40 million to be used for certain debt repayment and general corporate purposes (the 2018 Term Loan). The Term Loan Agreement continues to have a maturity date of July 29, 2020. The 2018 Term Loan bears interest at a rate equal to 10.0% per annum, with up to 5% per annum to be paid in kind. The Term Loan Amendment also changes the interest rate applicable to the Term Loans to be equal to 14% per annum, with up to 9% per annum to be paid in kind. As of September 30, 2018, the Term Loans and 2018 Term Loan had an outstanding principal balance of $174.5 million. Among other things, the Term Loan Amendment eliminates any principal amortization payments on any of the loans prior to maturity and modifies the financial covenants beginning in 2018. 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 ABL Credit Facilities 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 9.0 to 1.0 through December 31, 2018 and decreasing by 0.25 annually to 8.5 to 1.0 beginning in 2020. The Term Loan Agreement includes a non-cash debt premium balance of $10.7 million at September 30, 2018. As the terms under the Term Loan Amendment were negotiated and executed at the same time as other Welltower amendments included in the Restructuring Transactions (i.e. the Real Estate Loan Amendments and Welltower Master Lease Amendment), U.S. GAAP requires the Company record interest expense for each instrument at a rate equal to the combined effective interest rate rather than the stated interest rate of each instrument individually. The effective interest rate was calculated by measuring the aggregate cash flows payable to Welltower under the combined amended agreements compared to the carrying value of the original obligations on March 6, 2018. Since the combined effective interest rate of all the Restructuring Transactions involving Welltower of approximately 7.5% is lower than the Term Loan Amendment weighted interest rate of 13.0%, the Company recorded a debt premium, which was offset by a corresponding discount on the Welltower financing obligation, and will amortize over the life of the Term Loan Amendment. See Note 10 – “ Financing Obligation .” Real Estate Loans On March 30, 2018, the Company entered into two real estate loans with MidCap (MidCap Real Estate Loans) with combined available proceeds of $75.0 million, $73.0 million of which was drawn as of September 30, 2018. The MidCap Real Estate Loans are secured by 18 skilled nursing facilities and are subject to a five-year term maturing on March 30, 2023. The maturity of the MidCap Real Estate Loans will accelerate in the event the ABL Credit Facilities are repaid in full and terminated. The loans, which are interest only in the first year, are subject to an annual interest rate equal to LIBOR (subject to a floor of 1.5%) plus an applicable margin of 5.85%. Beginning April 1, 2019, mandatory principal payments commence with the balance of the loans to be repaid at maturity. Proceeds from the MidCap Real Estate Loans were used to repay partially the Welltower Real Estate Loans (defined below). The Company is subject to multiple real estate loan agreements with Welltower (Welltower Real Estate Loans). The Welltower Real Estate 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 Real Estate Loans. Each Welltower Real Estate Loan has a maturity date of January 1, 2022 and had a 10.25% interest rate beginning January 1, 2018. On February 21, 2018, the Company entered into amendments to the Welltower Real Estate Loans (the Real Estate Loan Amendments). The Real Estate Loan Amendments adjusted the annual interest rate beginning February 15, 2018 to 12%, of which 7% will be paid in cash and 5% will be paid in kind. In connection with the Real Estate Loan Amendments, the Company agreed to make commercially reasonable efforts to secure commitments by April 1, 2018 to repay no less than $105 million of the Welltower Real Estate Loan obligations. As of September 30, 2018, the Company secured repayments or commitments totaling approximately $82 million. As a result, the annual cash component of the interest payments was increased by approximately $2.0 million with a corresponding decrease in the paid in kind component of interest. At September 30, 2018, the Welltower Real Estate Loans are secured by a mortgage lien on the real property and a second lien on certain receivables of the operators of the 15 remaining facilities subject to the Welltower Real Estate Loans. In the nine months ended September 30, 2018, the Welltower Real Estate Loans were paid down $69.7 million using proceeds from the MidCap Real Estate Loans. The Welltower Real Estate Loans have an outstanding principal balance of $214.7 million at September 30, 2018. The Welltower Real Estate Loans include a non-cash debt premium balance of $31.4 million at September 30, 2018. As the terms under the Real Estate Loan Amendments were negotiated and executed at the same time as other Welltower amendments included in the Restructuring Transactions (i.e. the Term Loan Amendment and Welltower Master Lease Amendment), U.S. GAAP requires the Company record interest expense for each instrument at a rate equal to the combined effective interest rate rather than the stated interest rate of each instrument individually. The effective interest rate was calculated by measuring the aggregate cash flows payable to Welltower under the combined amended agreements compared to the carrying value of the original obligations on March 6, 2018. Since the combined effective interest rate of all the Restructuring Transactions involving Welltower of approximately 7.5% is lower than the Real Estate Loan Amendments weighted interest rate of 12.0%, the Company recorded a debt premium, which was offset by a corresponding discount on the Welltower financing obligation, and will amortize over the life of the Real Estate Loan Amendments. See Note 10 – “ Financing Obligation .” On April 1, 2016, the Company acquired one skilled nursing facility and entered into a $9.9 million real estate loan (the Other Real Estate Loan). On February 22, 2018, the skilled nursing facility subject to the Other Real Estate Loan was refinanced through a loan insured through the U.S. Department of Housing and Urban Development (HUD). Some of the proceeds from the refinancing were used to pay off fully the Other Real Estate Loan. HUD Insured Loans As of September 30, 2018, the Company has 31 skilled nursing facility loans insured by HUD with a combined aggregate principal balance of $276.2 million, which includes a $13.2 million debt premium on 10 skilled nursing facility loans established in purchase accounting in 2015. In the nine months ended September 30, 2018, one skilled nursing facility was financed with a HUD insured loan for $10.9 million using some of the proceeds to retire the Other Real Estate Loan. The HUD insured loans have an original amortization term of 30 to 35 years and an average remaining term of 29 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, 2018, the Company has total escrow reserve funds of $26.0 million with the loan servicer that are reported within prepaid expenses. The HUD loans of nine skilled nursing facilities, balances included in the disclosures noted above, were reclassified as assets held for sale in the consolidated balance sheets at September 30, 2018. These nine skilled nursing facilities had an aggregate principal balance of $88.0 million, net of debt issuance costs and debt premiums, and aggregate escrow reserve funds of $9.5 million. The nine skilled nursing facilities are expected to be sold in the fourth quarter of 2018. See Note 15 – “ Assets Held for Sale .” Notes Payable On January 17, 2018, the Company converted $19.6 million of its trade payables into a note payable. The note, as amended, will be repaid in equal monthly installments through December 2019 at an annual interest rate of 5.75% and has an outstanding balance of $9.7 million at September 30, 2018. In connection with Welltower’s sale of 64 skilled nursing facilities to 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, and has an outstanding accreted balance of $57.9 million at September 30, 2018. 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, and has an outstanding accreted principal balance of $13.2 million at September 30, 2018. The second note had an initial principal balance of $12.0 million and was converted into 3.0 million shares of common stock on November 13, 2017 and cancelled. 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 3.4% at September 30, 2018, 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 5.0% at September 30, 2018. Maturity dates range from 2023 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 decreased $10.9 million due to the reclassification of a non-recourse loan to long term upon the completion of a refinancing in March 2018. Debt Covenants The ABL Credit Facilities, the Term Loan Agreement and the Welltower Real Estate 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, minimum liquidity and maximum capital expenditures. The Credit Facilities include cross-default provisions with each other and certain material lease agreements. At September 30, 2018, the Company was in compliance with its financial covenants contained in the Credit Facilities. The Company’s ability to maintain compliance with its debt 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 debt covenant compliance requirements. 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 maturity of total debt of $1,184.6 million, excluding debt issuance costs and other non-cash debt discounts and premiums, at September 30, 2018 is as follows (in thousands): Twelve months ended September 30, 2019 $ 116,111 2020 183,934 2021 64,490 2022 234,689 2023 407,907 Thereafter 177,419 Total debt maturity $ 1,184,550 |
Leases and Lease Commitments
Leases and Lease Commitments | 9 Months Ended |
Sep. 30, 2018 | |
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, 2018 are as follows (in thousands): Twelve months ended September 30, Capital Leases Operating Leases 2019 $ 86,885 $ 118,433 2020 85,745 117,352 2021 87,593 117,154 2022 89,516 94,680 2023 91,508 81,981 Thereafter 3,210,719 364,335 Total future minimum lease payments 3,651,966 $ 893,935 Less amount representing interest (2,699,329) Capital lease obligation 952,637 Less current portion (2,164) Long-term capital lease obligation $ 950,473 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 bear a weighted average imputed interest rate of 10.0% at September 30, 2018, and mature at dates ranging from 2026 to 2048. Deferred Lease Balances At September 30, 2018 and December 31, 2017, the Company had $25.1 million and $34.9 million, respectively, of favorable leases net of accumulated amortization, included in identifiable intangible assets, and $8.8 million and $15.5 million, respectively, of unfavorable leases net of accumulated amortization included in other long-term liabilities on the consolidated balance sheets. 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, 2018 and December 31, 2017, the Company had $21.6 million and $28.7 million, respectively, of deferred straight-line rent balances included in other long-term liabilities on the consolidated balance sheets. 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 . These leases include cross-default provisions with each other and the Credit Facilities. The Company has master lease agreements with Welltower, Sabra 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, 2018, the Company is in compliance with the financial covenants contained in the Master Lease Agreements. The Company has a master lease agreement with Second Spring involving 51 of its facilities. The Company did not meet a financial covenant contained in this master lease agreement at September 30, 2018. The Company received a waiver for this covenant breach. 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, 2018. The Company received a waiver for these covenant breaches. At September 30, 2018, the Company did not meet certain financial covenants contained in seven leases related to 45 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 at September 30, 2018 will have a material adverse impact on it. 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. |
Financing Obligations
Financing Obligations | 9 Months Ended |
Sep. 30, 2018 | |
Financing Obligations | |
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 approximately 9.2% at September 30, 2018, and mature at dates ranging from 2021 to 2048. The Welltower Master Lease Amendment includes a non-cash financing obligation discount balance of $49.0 million at September 30, 2018. As the terms under the Welltower Master Lease Amendment were negotiated and executed at the same time as other Welltower amendments included in the Restructuring Transactions (i.e. the Term Loan Amendment and Real Estate Loan Amendment), U.S. GAAP requires the Company record interest expense for each instrument at a rate equal to the combined effective interest rate rather than the stated interest rate of each instrument individually. The effective interest rate was calculated by measuring the aggregate cash flows payable to Welltower under the combined amended agreements compared to the carrying value of the original obligations on March 6, 2018. Since the combined effective interest rate of all the Restructuring Transactions involving Welltower of approximately 7.5% is higher than the Welltower Master Lease Amendment weighted interest rate of approximately 7.0%, the Company recorded a financing obligation discount, which was offset by a corresponding premium on each of the Welltower Real Estate Loans and Term Loan Amendment, and will amortize over the life of the Welltower Master Lease Amendment. See Note 8 – “ Long-Term Debt – Term Loan Agreements ” and “ Long-Term Debt – Real Estate Loans .” Future minimum payments for the next five years and thereafter under leases classified as financing obligations at September 30, 2018 are as follows (in thousands): Twelve months ended September 30, 2019 $ 236,208 2020 240,868 2021 245,657 2022 241,820 2023 246,329 Thereafter 6,723,039 Total future minimum lease payments 7,933,921 Less amount representing interest (5,204,724) Financing obligations $ 2,729,197 Less current portion (1,947) Long-term financing obligations $ 2,727,250 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Taxes | |
Income Taxes | (11) Income Taxes The Company effectively owns 63.1% 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 63.1% ownership of FC-GEN. For the three months ended September 30, 2018, the Company recorded income tax benefit of $1.2 million from continuing operations, representing an effective tax rate of 1.3%, compared to income tax expense of $1.6 million from continuing operations, representing an effective tax rate of (0.3)%, for the same period in 2017. For the nine months ended September 30, 2018, the Company recorded income tax benefit of $1.8 million from continuing operations, representing an effective tax rate of 0.7%, compared to income tax expense of $5.7 million from continuing operations, representing an effective tax rate of (0.7)%, for the same period in 2017. The change in the effective tax rate for the three and nine months ended September 30, 2018, is attributable to a reduced projected change in the Company’s hanging credit deferred tax liability compared to the prior period that is the result of the goodwill impairment recorded against the inpatient services business in the third quarter of 2017. 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, 2018, management has determined that the valuation allowance is still necessary. The Company’s Bermuda captive insurance company is expected to produce a minimal U.S. federal taxable loss in 2018. The captive is expected to generate positive pre-tax income in future periods to off-set its deferred tax assets. The 2018 U.S. federal taxable loss cannot be carried back but can be carried forward indefinitely. The Company provides rehabilitation therapy services within the People’s Republic of China and Hong Kong. At September 30, 2018, these business operations do not comprise a significant portion of the Company’s overall operating results. 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. The SEC issued Staff Accounting Bulletin No. 118 (SAB 118) on December 23, 2017. SAB 118 provides a one-year measurement period from a registrant’s reporting period that includes the Tax Reform Act enactment date to allow the registrant sufficient time to obtain, prepare and analyze information to complete the accounting required under ASC 740. The Company's federal net operating losses that have been incurred prior to January 1, 2018, will continue to have a 20-year carryforward limitation applied and will need to be evaluated for recoverability in the future as such. For net operating losses created after December 31, 2017, the net operating losses will have an indefinite life, but usage will be limited to 80% of taxable income in any given year. The Company has estimated the impact of the Tax Reform Act on state income taxes reflected in its income tax expense for the three and nine months ended September 30, 2018. Reasonable estimates for the Company’s state and local provision were made based on the Company's analysis of tax reform. These provisional amounts will be adjusted in the year end 2018 financial reporting as additional information is obtained. Additional information that may affect the Company's provisional amounts would include further clarification and guidance on how the Internal Revenue Service (IRS) will implement tax reform and further clarification and guidance on how state taxing authorities will implement tax reform and the related effect on our state and local income tax returns, state and local net operating losses and corresponding valuation allowances. Exchange Rights and Tax Receivable Agreement 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 1,860,592 FC-GEN units and Class C shares in the nine months ended September 30, 2018 equating to 1,860,912 Class A shares. The exchanges during the nine months ended September 30, 2018 resulted in a $9.5 million internal revenue code (IRC) Section 754 tax basis step-up in the tax deductible goodwill of FC-GEN. There were exchanges of 2,248,869 FC-GEN units and Class C shares in 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. The Company has 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 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, 2018 | |
Commitments and Contingencies | |
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 general and professional liability and workers’ compensation 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. The discount rate for the current policy year is 2.66%. 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 $7.8 million and $6.7 million as of September 30, 2018 and December 31, 2017, respectively. The reserves for general and professional liability are recorded on an undiscounted basis. For the three months ended September 30, 2018 and 2017, the provision for general and professional liability risk totaled $25.0 million and $33.8 million, respectively. For the nine months ended September 30, 2018 and 2017, the provision for general and professional liability risk totaled $79.2 million and $102.2 million, respectively. The reserves for general and professional liability were $436.2 million and $442.9 million as of September 30, 2018 and December 31, 2017, respectively. For the three months ended September 30, 2018 and 2017, the provision for workers’ compensation risk totaled $15.0 million and $13.9 million, respectively. For the nine months ended September 30, 2018 and 2017, the provision for workers’ compensation risk totaled $41.4 million and $42.7 million, respectively. The reserves for workers’ compensation risks were $173.9 million and $174.6 million as of September 30, 2018 and December 31, 2017, 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 $16.9 million and $17.5 million as of September 30, 2018 and December 31, 2017, 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, 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. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | (13) The Company’s financial instruments consist primarily of cash and cash equivalents, restricted cash and equivalents, 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. 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, 2018 and December 31, 2017, 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: 2018 (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ 23,170 $ 23,170 $ — $ — Restricted cash and equivalents 104,930 104,930 — — Restricted investments in marketable securities 137,824 137,824 — — Total $ 265,924 $ 265,924 $ — $ — 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: 2017 (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ 54,525 $ 54,525 $ — $ — Restricted cash and equivalents 4,113 4,113 — — Restricted investments in marketable securities 126,116 126,116 — — Total $ 184,754 $ 184,754 $ — $ — The Company places its cash and cash equivalents, restricted cash and 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, 2018 December 31, 2017 Carrying Value Fair Value Carrying Value Fair Value Asset based lending facilities $ 403,110 $ 403,110 $ — $ — Revolving credit facilities — — 303,091 303,091 Term loan agreements 183,043 183,043 120,706 120,706 Real estate loans 313,730 313,730 281,039 281,039 HUD insured loans 182,656 181,837 263,827 250,768 Notes payable 80,794 80,794 68,122 68,122 Mortgages and other secured debt (recourse) 13,857 13,857 12,536 12,536 Mortgages and other secured debt (non-recourse) 26,835 26,835 27,978 27,978 $ 1,204,025 $ 1,203,206 $ 1,077,299 $ 1,064,240 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 this approach approximates the exit price notion of fair value measurement and 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, 2018 September 30, 2018 Assets: Property and equipment, net $ 2,919,584 $ 88,008 Goodwill 85,642 — Intangible assets, net 125,386 2,061 Impairment Charges - Carrying Value Nine months ended December 31, 2017 September 30, 2017 Assets: Property and equipment, net $ 3,413,599 $ 163,364 Goodwill 85,642 351,470 Intangible assets, net 142,976 8,576 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. |
Asset Impairment Charges
Asset Impairment Charges | 9 Months Ended |
Sep. 30, 2018 | |
Asset Impairment Charges | |
Asset Impairment Charges | (14) Long-Lived Assets with a Definite Useful Life In each quarter, the Company’s long-lived assets with a definite useful life are 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 lives of the primary asset in each long-lived asset group, principally a building in the inpatient segment and customer relationship assets in the rehabilitation therapy services segment. During the three months ended September 30, 2018 and 2017, the Company recognized impairment charges in the inpatient segment totaling $32.4 million and $163.4 million, respectively. During the nine months ended September 30, 2018 and 2017, the Company recognized impairment charges in the inpatient segment totaling $88.0 million and $163.4 million, respectively. Identifiable Intangible 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. During the three and nine months ended September 30, 2018, the Company recognized impairment charges on its favorable lease intangible assets with a definite useful life of $0.9 million and $2.1 million, respectively. There were no impairment charges recognized in the three and nine months ended September 30, 2017. This charge is presented in goodwill and identifiable intangible asset impairments on the consolidated statements of operations. |
Assets Held for Sale
Assets Held for Sale | 9 Months Ended |
Sep. 30, 2018 | |
Assets Held for Sale | |
Assets Held for Sale | (15) In the normal course of business, the Company continually evaluates the performance of its operating units, with an emphasis on selling or closing underperforming or non-strategic assets. These assets are evaluated to determine whether they qualify as assets held for sale or discontinued operations. The assets and liabilities of a disposal group classified as held for sale shall be presented separately in the asset and liability sections, respectively, of the statement of financial position in the period in which they are identified only. Assets held for sale that qualify as discontinued operations are removed from the results of continuing operations. The results of operations in the current and prior year periods, along with any cost to exit such businesses in the year of discontinuation, are classified as discontinued operations in the consolidated statements of operations. In the first quarter of 2018, the Company identified a disposal group of 23 skilled nursing facilities operated by the Company in the state of Texas that qualified as assets held for sale. The Company entered into a purchase and sale agreement to sell the facilities for $120.0 million. A $20.0 million asset impairment charge was recognized in the nine months ended September 30, 2018 in the statements of operations to reflect a decrease in the sale price of the disposal group. See Note 14 – “ Asset Impairment Charges - Long-Lived Assets with a Definite Useful Life .” The transaction will mark an exit from the inpatient business in Texas. Thirteen of the facilities are subject to Welltower Real Estate Loans, nine of the facilities are subject to HUD-insured loans and one facility is leased and accounted for as a financing obligation. The disposal group does not meet the criteria as a discontinued operation. The sales were completed in the fourth quarter of 2018. See Note 17 – “ Subsequent Events – Texas Divestitures.” The following table sets forth the major classes of assets and liabilities included as part of the disposal group (in thousands): September 30, 2018 Current assets: Prepaid expenses $ 9,533 Long-term assets: Property and equipment, net of accumulated depreciation of $26,145 99,718 Total assets $ 109,251 Current liabilities: Current installments of long-term debt $ 2,123 Long-term liabilities: Long-term debt 86,137 Financing obligations 19,670 Total liabilities $ 107,930 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions | |
Related Party Transactions | ( 16) The Company provides rehabilitation services to certain facilities owned and operated by a customer in which certain members of the Company’s board of directors beneficially own an ownership interest. These services resulted in net revenues of $30.6 million and $96.2 million in the three and nine months ended September 30, 2018, respectively, as compared to net revenues of $35.1 million and $109.1 million in the three and nine months ended September 30, 2017, respectively. The services resulted in net accounts receivable balances of $30.1 million and $32.0 million at September 30, 2018 and December 31, 2017, respectively. In the three months ended September 30, 2018, $58.9 million in gross accounts receivable was converted to a note receivable. A $55.0 million reserve recorded in 2017 was posted against the notes receivable. The Company deemed this reserve prudent given the delays in collection on account of this related party customer. The reserve represents the judgment of management, and does not indicate a forgiveness of any amount of the outstanding accounts receivable owed by this related party customer. The Company is monitoring the financial condition of this customer and will adjust the reserve levels accordingly as new information about their outlook is available. Effective May 1, 2016, the Company completed the sale of its hospice and home health operations to FC Compassus LLC for $72.0 million in cash and a $12.0 million interest-bearing note. Certain members of the Company’s board of directors indirectly beneficially hold ownership interests in FC Compassus LLC totaling less than 10% in the aggregate. The combined note and accrued interest balance of $18.1 million remains outstanding at September 30, 2018. On May 1, 2016, the Company entered into preferred provider and affiliation agreements with FC Compassus LLC. Fees for these services amounted to $3.4 million and $10.0 million in the three and nine months ended September 30, 2018, respectively, compared to $3.2 million and $8.9 million in the three and nine months ended September 30, 2017, respectively. Certain subsidiaries of the Company have entered into a lease and a purchase option of twelve centers in New Hampshire and Florida from twelve separate limited liability companies affiliated with Next Healthcare (the Next Landlord Entities). The lease is effective June 1, 2018 and the annualized rent paid will initially be $13.0 million. The purchase option will become exercisable in the fifth lease year. Certain members of the Company’s board of directors each directly or indirectly hold an ownership interest in the Next Landlord Entities totaling less than 2.5% in the aggregate. See Note 3 – “ Significant Transactions and Events – Lease Transactions and Divestitures. ” |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Event | |
Subsequent Events | (17) Subsequent Events Texas Divestitures The Company divested 16 and seven Texas skilled nursing facilities on October 1, 2018 and November 1, 2018, respectively. The 23 skilled nursing facilities are presented as assets held for sale at September 30, 2018. See Note 15 – “ Assets Held for Sale. ” The skilled nursing facilities generated annual revenues of $184.5 million and pre-tax net loss of $3.5 million. Other Divestitures On November 1, 2018, the Company divested two leased skilled nursing facilities located in Idaho, two leased skilled nursing facilities located in Montana and one owned assisted living facility located in New Mexico. The facilities generated annual revenues of $30.1 million and pre-tax net income of $2.9 million. New Mexico and Arizona Acquisitions On November 1, 2018, the Company acquired the operations of eight skilled nursing facilities and one assisted living facility in New Mexico and Arizona. The nine new facilities have approximately 1,000 beds and generate approximate annual net revenue of $60 million. The facilities are leased from Omega. The Company expects no material impact to pre-tax net income in the next 12 months. |
General Information (Policies)
General Information (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
General Information | |
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, 2018, the Company provides inpatient services through 445 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. 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 VIEs was not material at September 30, 2018. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q 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, 2017 filed with the U.S. Securities and Exchange Commission (the SEC) on Form 10-K on March 16, 2018. Certain prior year disclosure amounts have been reclassified to conform to current period presentation. Restricted cash had previously been included in restricted cash and investments in marketable securities. As a result of recently adopted accounting pronouncements, discussed subsequently, restricted cash is now presented separately on the Company’s consolidated balance sheets. The provision for losses on accounts receivable has been combined with other operating expenses and general and administrative costs, on the consolidated statement of operations. See Note 4 – “ Net Revenues and Accounts Receivable. ” |
Financial Condition and Liquidity Considerations | Financial Condition and Liquidity Considerations The accompanying consolidated financial statements have been prepared on the basis that 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 9, 2018). 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 9, 2019. Based upon such considerations, management determined that the Company is able to continue as a going concern for 12 months following the date of issuance of these financial statements (November 9, 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 2017. In response to these issues, the Company entered into a number of agreements, amendments and new financing facilities (the Restructuring Transactions) during the nine months ended September 30, 2018. See Note 3 – “ Significant Transactions and Events – Restructuring Transactions .” In total, these agreements and amendments are estimated to reduce the Company’s annual cash fixed charges by approximately $62.0 million beginning January 1, 2018. The new financing agreements provided $70.0 million of additional cash and borrowing availability, increasing the Company’s liquidity and financial flexibility. In connection with the Restructuring Transactions, the Company entered into a new asset based lending facility agreement, replacing its prior revolving credit facilities (the Revolving Credit Facilities) and eliminating its forbearance agreement. Also in connection with the Restructuring Transactions, the Company amended the financial covenants in all of its material loan agreements and all but two of its material master leases. Financial covenants beginning in 2018 were amended to account for changes in the Company’s capital structure as a result of the Restructuring Transactions and to account for the current business climate. The Company received waivers from the counterparties to two of its material master leases, for which agreements to amend financial covenants were not attained, with respect to compliance with financial covenants. |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers and all related amendments (ASC 606), which serves to supersede most existing revenue recognition guidance, including guidance specific to the healthcare industry. ASC 606 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 Company adopted ASC 606 effective January 1, 2018 using the modified retrospective transition method. There was no cumulative effect on the opening balance of accumulated deficit as a result of adopting the standard as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. See Note 4 – “ Net Revenues and Accounts Receivable. ” 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 Company adopted the new guidance effective January 1, 2018. The adoption of ASU 2016-01 did not have a material impact on the Company’s consolidated financial condition and results of operations. 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 Company adopted the new guidance effective January 1, 2018. Upon assessment of the cash flow issues subject to amendment, the adoption of ASU 2016-15 did not 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 (Topic 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 Company adopted the new guidance effective January 1, 2018. To better accommodate the adoption of ASU 2016-18, the Company has elected to separately disclose restricted cash on its consolidated balance sheets for all periods presented. The adoption of ASU 2016-18 did not 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 (Topic 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 Company adopted the new guidance effective January 1, 2018. 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. In March 2018, the FASB issued ASU 2018-05, Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 . The amendments in this update provide guidance on when to record and disclose provisional amounts for certain income tax effects of the Tax Reform Act. The amendments also require any provisional amounts or subsequent adjustments to be included in net income from continuing operations. Additionally, this ASU discusses required disclosures that an entity must make with regard to the Tax Reform Act. This ASU is effective immediately as new information is available to adjust provisional amounts that were previously recorded. The Company has adopted this standard as of January 1, 2018 and will continue to evaluate indicators that may give rise to a change in its tax provision as a result of the Tax Reform Act. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02), which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842 ; ASU No. 2018-10, Codification Improvements to Topic 842, Leases ; and ASU No. 2018-11, Targeted Improvements . The new standard establishes a right-of-use (ROU) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations. The new standard is effective for the Company on January 1, 2019, with early adoption permitted. The Company expects to adopt the new standard on its effective date. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. The Company expects to adopt the new standard on January 1, 2019 and use the effective date as the date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. The new standard provides a number of optional practical expedients in transition. The Company expects to elect the ‘package of practical expedients’, which permit it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company does not expect to elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter is not applicable to the Company. The Company expects that this standard will have a material effect on its financial statements. While the Company will continue to assess all of the effects of adoption, it currently believes the most significant effects relate to (1) the recognition of new ROU assets and lease liabilities on its balance sheet for real estate operating leases; (2) the derecognition of existing assets and liabilities for certain sale-leaseback transactions (including those arising from build-to-suit lease arrangements for which construction is complete and the Company is leasing the constructed asset) that currently do not qualify for sale accounting; and (3) providing significant new disclosures about its leasing activities. The Company does not expect a significant change in its leasing activities between now and adoption. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company currently expects to elect the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which permits entities to reclassify the disproportionate income tax effects of the Tax Cuts and Jobs Act (Tax Reform Act) on items within accumulated other comprehensive income (loss) to retained earnings. These disproportionate income tax effect items are referred to as "stranded tax effects." Amendments in this update only relate to the reclassification of the income tax effects of the Tax Reform Act. Other accounting guidance that requires the effect of changes in tax laws or rates to be included in net income from continuing operations is not affected by this update. ASU 2018-02 is effective for the Company beginning January 1, 2019 and should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Reform Act is recognized. The adoption of ASU 2018-02 will not have a material impact on the Company’s consolidated financial statements. |
Certain Significant Risks and_2
Certain Significant Risks and Uncertainties (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Certain Significant Risks and Uncertainties | |
Schedule of revenue by major source (in thousands) | Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Medicare 21 % 22 % 22 % 23 % Medicaid 58 % 57 % 57 % 56 % Insurance 12 % 12 % 12 % 12 % Private 8 % 8 % 8 % 8 % Other 1 % 1 % 1 % 1 % Total 100 % 100 % 100 % 100 % |
Net Revenues and Accounts Rec_2
Net Revenues and Accounts Receivable (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Net Revenues and Accounts Receivable | |
Disaggregation of revenue by payor type by revenue stream (in thousands) | Three months ended September 30, 2018 Rehabilitation Inpatient Therapy Other Services Services Services Total Medicare $ 216,382 $ 22,756 $ — $ 239,138 Medicaid 613,539 545 — 614,084 Insurance 125,060 5,412 — 130,472 Private 85,148 139 — 85,287 Third party providers — 99,851 17,995 117,846 Other 14,539 3,461 12,444 30,444 Total net revenues $ 1,054,668 $ 132,164 $ 30,439 $ 1,217,271 Three months ended September 30, 2017 (4) Rehabilitation Inpatient Therapy Other Services Services Services Total Medicare $ 248,436 $ 22,761 $ — $ 271,197 Medicaid 641,378 541 — 641,919 Insurance 118,356 6,032 — 124,388 Private 96,583 143 — 96,726 Third party providers — 118,478 21,385 139,863 Other 24,882 3,943 12,534 41,359 Total net revenues $ 1,129,635 $ 151,898 $ 33,919 $ 1,315,452 (1) Includes Assisted/Senior living revenue of $24.0 million and $24.2 million for the three months ended September 30, 2018 and 2017, respectively. Such amounts do not represent contracts with customers under ASC 606. (2) Primarily consists of revenue from Veteran Affairs and administration of third party facilities. (3) Includes net revenues from all payors generated by the other services, excluding third party providers. (4) The Company adopted the new revenue standard using the modified retrospective transition method. As a result, the prior period amounts have not been adjusted. Nine months ended September 30, 2018 Rehabilitation Inpatient Therapy Other Services Services Services Total Medicare $ 700,202 $ 68,861 $ — $ 769,063 Medicaid 1,854,706 1,584 — 1,856,290 Insurance 400,889 18,020 — 418,909 Private 258,887 391 — 259,278 Third party providers — 319,015 63,500 382,515 Other 50,924 13,911 39,813 104,648 Total net revenues $ 3,265,608 $ 421,782 . $ 103,313 $ 3,790,703 Nine months ended September 30, 2017 (4) Rehabilitation Inpatient Therapy Other Services Services Services Total Medicare $ 793,641 $ 70,831 $ — $ 864,472 Medicaid 1,912,130 1,137 — 1,913,267 Insurance 417,619 18,358 — 435,977 Private 293,455 500 — 293,955 Third party providers — 353,026 70,051 423,077 Other 65,300 12,154 37,658 115,112 Total net revenues $ 3,482,145 $ 456,006 $ 107,709 $ 4,045,860 (1) Includes Assisted/Senior living revenue of $71.2 million and $72.3 million for the nine months ended September 30, 2018 and 2017, respectively. Such amounts do not represent contracts with customers under ASC 606. (2) Primarily consists of revenue from Veteran Affairs and administration of third party facilities. (3) Includes net revenues from all payors generated by the other services, excluding third party providers. (4) The Company adopted the new revenue standard using the modified retrospective transition method. As a result, the prior period amounts have not been adjusted. |
Loss Per Share (Tables)
Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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, 2018 2017 2018 2017 Numerator: Loss from continuing operations $ (91,901) $ (615,022) $ (263,431) $ (804,117) Less: Net loss attributable to noncontrolling interests (33,773) (241,200) (97,153) (314,446) Loss from continuing operations attributable to Genesis Healthcare, Inc. $ (58,128) $ (373,822) $ (166,278) $ (489,671) Loss from discontinued operations, net of taxes — (2) — (70) Net loss attributable to Genesis Healthcare, Inc. $ (58,128) $ (373,824) $ (166,278) $ (489,741) Denominator: Weighted-average shares outstanding for basic and diluted net loss per share 102,489 94,940 100,461 93,376 Basic and diluted net loss per common share: Loss from continuing operations attributable to Genesis Healthcare, Inc. $ (0.57) $ (3.94) $ (1.66) $ (5.24) Loss from discontinued operations, net of taxes — — — — Net loss attributable to Genesis Healthcare, Inc. $ (0.57) $ (3.94) $ (1.66) $ (5.24) |
Schedule of Anti-dilutive Securities (in thousands) | Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Exchange of noncontrolling interests 59,711 61,692 60,289 62,108 Employee and director unvested restricted stock units 266 40 691 988 Convertible note — 3,000 — 3,000 Stock warrants 1,500 — 1,359 — |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Information | |
Summary of Segmented Revenues (in thousands) | A summary of the Company’s segmented revenues follows (in thousands, except percentages): Three months ended September 30, 2018 2017 Increase / (Decrease) Revenue Revenue Revenue Revenue Dollars Percentage Dollars Percentage Dollars Percentage Revenues: Inpatient services: Skilled nursing facilities $ 1,029,453 84.6 % $ 1,103,554 83.8 % $ (74,101) (6.7) % Assisted/Senior living facilities 23,974 2.0 % 24,185 1.8 % (211) (0.9) % Administration of third party facilities 2,025 0.2 % 2,266 0.2 % (241) (10.6) % Elimination of administrative services (784) (0.1) % (370) — % (414) 111.9 % Inpatient services, net 1,054,668 86.7 % 1,129,635 85.8 % (74,967) (6.6) % Rehabilitation therapy services: Total therapy services 214,421 17.6 % 244,471 18.6 % (30,050) (12.3) % Elimination intersegment rehabilitation therapy services (82,257) (6.8) % (92,573) (7.0) % 10,316 (11.1) % Third party rehabilitation therapy services 132,164 10.8 % 151,898 11.6 % (19,734) (13.0) % Other services: Total other services 46,977 3.9 % 42,901 3.3 % 4,076 9.5 % Elimination intersegment other services (16,538) (1.4) % (8,982) (0.7) % (7,556) 84.1 % Third party other services 30,439 2.5 % 33,919 2.6 % (3,480) (10.3) % Net revenues $ 1,217,271 100.0 % $ 1,315,452 100.0 % $ (98,181) (7.5) % Nine months ended September 30, 2018 2017 Increase / (Decrease) Revenue Revenue Revenue Revenue Dollars Percentage Dollars Percentage Dollars Percentage Revenues: Inpatient services: Skilled nursing facilities $ 3,190,065 84.0 % $ 3,404,181 84.0 % $ (214,116) (6.3) % Assisted/Senior living facilities 71,220 1.9 % 72,262 1.8 % (1,042) (1.4) % Administration of third party facilities 6,577 0.2 % 6,841 0.2 % (264) (3.9) % Elimination of administrative services (2,254) — % (1,139) — % (1,115) 97.9 % Inpatient services, net 3,265,608 86.1 % 3,482,145 86.0 % (216,537) (6.2) % Rehabilitation therapy services: Total therapy services 685,672 18.1 % 743,605 18.4 % (57,933) (7.8) % Elimination intersegment rehabilitation therapy services (263,890) (7.0) % (287,599) (7.1) % 23,709 (8.2) % Third party rehabilitation therapy services 421,782 11.1 % 456,006 11.3 % (34,224) (7.5) % Other services: Total other services 146,830 3.9 % 133,168 3.3 % 13,662 10.3 % Elimination intersegment other services (43,517) (1.1) % (25,459) (0.6) % (18,058) 70.9 % Third party other services 103,313 2.8 % 107,709 2.7 % (4,396) (4.1) % Net revenues $ 3,790,703 100.0 % $ 4,045,860 100.0 % $ (255,157) (6.3) % |
Summaries of Condensed Consolidated Statements of Operations, Total Assets and Goodwill (in thousands) | A summary of the Company’s unaudited condensed consolidated statement of operations follows (in thousands): Three months ended September 30, 2018 Rehabilitation Inpatient Therapy Other Services Services Services Corporate Eliminations Consolidated Net revenues $ 1,055,452 $ 214,421 $ 46,914 $ 63 $ (99,579) $ 1,217,271 Salaries, wages and benefits 480,345 175,098 25,161 — — 680,604 Other operating expenses 428,398 12,891 29,353 — (99,578) 371,064 General and administrative costs — — — 35,482 — 35,482 Lease expense 31,732 — 316 318 — 32,366 Depreciation and amortization expense 46,472 3,147 172 3,247 — 53,038 Interest expense 91,106 14 9 24,566 — 115,695 Investment income — — — (2,178) — (2,178) Other income (20,207) — — — — (20,207) Transaction costs — — — 11,361 — 11,361 Long-lived asset impairments 32,390 — — — — 32,390 Goodwill and identifiable intangible asset impairments 929 — — — — 929 Equity in net (income) loss of unconsolidated affiliates — — — (523) 371 (152) (Loss) income before income tax benefit (35,713) 23,271 (8,097) (72,210) (372) (93,121) Income tax benefit — — — (1,220) — (1,220) (Loss) income from continuing operations $ (35,713) $ 23,271 $ (8,097) $ (70,990) $ (372) $ (91,901) 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 464,894 21,429 15,689 — (101,926) 400,086 General and administrative costs — — — 41,420 — 41,420 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 and other related charges — 297 — — — 297 Long-lived asset impairment charges 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 expense (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) Nine months ended September 30, 2018 Rehabilitation Inpatient Therapy Other Services Services Services Corporate Eliminations Consolidated Net revenues $ 3,267,862 $ 685,672 $ 146,714 $ 116 $ (309,661) $ 3,790,703 Salaries, wages and benefits 1,477,153 562,875 82,100 — — 2,122,128 Other operating expenses 1,323,423 41,707 70,310 — (309,661) 1,125,779 General and administrative costs — — — 114,404 — 114,404 Lease expense 95,660 — 959 929 — 97,548 Depreciation and amortization expense 147,552 9,479 509 10,496 — 168,036 Interest expense 277,753 41 27 70,866 — 348,687 Loss on early extinguishment of debt — — — 9,785 — 9,785 Investment income — — — (4,856) — (4,856) Other (income) loss (42,438) — 78 — — (42,360) Transaction costs — — — 26,567 — 26,567 Long-lived asset impairments 88,008 — — — — 88,008 Goodwill and identifiable intangible asset impairments 2,061 — — — — 2,061 Equity in net (income) loss of unconsolidated affiliates — — — (1,029) 1,135 106 (Loss) income before income tax benefit (101,310) 71,570 (7,269) (227,046) (1,135) (265,190) Income tax benefit — — — (1,759) — (1,759) (Loss) income from continuing operations $ (101,310) $ 71,570 $ (7,269) $ (225,287) $ (1,135) $ (263,431) 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 1,365,896 65,074 45,451 — (314,198) 1,162,223 General and administrative costs — — — 127,657 — 127,657 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 early extinguishment of debt — — — 2,301 — 2,301 Investment income — — — (4,097) — (4,097) Other loss (income) 15,112 732 — (242) — 15,602 Transaction costs — — — 7,862 — 7,862 Customer receivership and other related charges — 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 expense (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) The following table presents the segment assets as of September 30, 2018 compared to December 31, 2017 (in thousands): September 30, 2018 December 31, 2017 Inpatient services $ 3,865,304 $ 4,303,370 Rehabilitation therapy services 341,139 351,711 Other services 42,161 50,127 Corporate and eliminations 142,770 82,657 Total assets $ 4,391,374 $ 4,787,865 The following table presents segment goodwill as of September 30, 2018 compared to December 31, 2017 (in thousands): Inpatient Rehabilitation Therapy Services Other Services Consolidated Balance at December 31, 2017 Goodwill 351,470 73,814 11,828 437,112 Accumulated impairment losses (351,470) — — (351,470) $ — $ 73,814 $ 11,828 $ 85,642 Balance at September 30, 2018 Goodwill 351,470 73,814 11,828 437,112 Accumulated impairment losses (351,470) — — (351,470) $ — $ 73,814 $ 11,828 $ 85,642 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Property and Equipment | |
Schedule of Property and Equipment (in thousands) | September 30, 2018 December 31, 2017 Land, buildings and improvements $ 472,553 $ 591,022 Capital lease land, buildings and improvements 684,225 752,657 Financing obligation land, buildings and improvements 2,283,764 2,525,551 Equipment, furniture and fixtures 420,335 453,230 Construction in progress 10,912 30,294 Gross property and equipment 3,871,789 4,352,754 Less: accumulated depreciation (952,205) (939,155) Net property and equipment $ 2,919,584 $ 3,413,599 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Long-Term Debt. | |
Schedule of Long-term Debt (in thousands) | September 30, 2018 December 31, 2017 Asset based lending facilities, net of debt issuance costs of $12,016 and $0 at September 30, 2018 and December 31, 2017, respectively $ 403,110 $ — Revolving credit facilities, net of debt issuance costs of $0 and $10,109 at September 30, 2018 and December 31, 2017, respectively — 303,091 Term loan agreements, net of debt issuance costs of $2,143 and $3,020 and debt premium balance of $10,670 and $0 at September 30, 2018 and December 31, 2017, respectively 183,043 120,706 Real estate loans, net of debt issuance costs of $5,381 and $3,486 and debt premium balance of $31,408 and $0 at September 30, 2018 and December 31, 2017, respectively 313,730 281,039 HUD insured loans, net of debt issuance costs of $5,280 and $5,590 and debt premium balance of $868 and $13,590 at September 30, 2018 and December 31, 2017, respectively 182,656 263,827 Notes payable 80,794 68,122 Mortgages and other secured debt (recourse) 13,857 12,536 Mortgages and other secured debt (non-recourse), net of debt issuance costs of $195 and $99 and debt premium balance of $1,544 and $1,618 at September 30, 2018 and December 31, 2017, respectively 26,835 27,978 1,204,025 1,077,299 Less: Current installments of long-term debt (116,077) (26,962) Long-term debt $ 1,087,948 $ 1,050,337 |
Schedule of Borrowings and Interest Rates (dollars in thousands) | Weighted Average ABL Credit Facilities Commitment Borrowings Interest Term loan facility $ 325,000 $ 325,000 8.40 % Revolving credit facility (Non-HUD) 155,000 60,086 8.40 % Revolving credit facility (HUD) 45,000 30,039 8.40 % Delayed draw facility 30,000 — 13.40 % $ 555,000 $ 415,125 8.40 % |
Schedule of Maturity of Total Debt (in thousands) | Twelve months ended September 30, 2019 $ 116,111 2020 183,934 2021 64,490 2022 234,689 2023 407,907 Thereafter 177,419 Total debt maturity $ 1,184,550 |
Leases and Lease Commitments (T
Leases and Lease Commitments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Leases and Lease Commitments | |
Schedule of Future Minimum Capital and Operating Lease Payments (in thousands) | Twelve months ended September 30, Capital Leases Operating Leases 2019 $ 86,885 $ 118,433 2020 85,745 117,352 2021 87,593 117,154 2022 89,516 94,680 2023 91,508 81,981 Thereafter 3,210,719 364,335 Total future minimum lease payments 3,651,966 $ 893,935 Less amount representing interest (2,699,329) Capital lease obligation 952,637 Less current portion (2,164) Long-term capital lease obligation $ 950,473 |
Financing Obligations (Tables)
Financing Obligations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Financing Obligations | |
Schedule of Future Minimum Financing Lease Payments (in thousands) | Twelve months ended September 30, 2019 $ 236,208 2020 240,868 2021 245,657 2022 241,820 2023 246,329 Thereafter 6,723,039 Total future minimum lease payments 7,933,921 Less amount representing interest (5,204,724) Financing obligations $ 2,729,197 Less current portion (1,947) Long-term financing obligations $ 2,727,250 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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, 2018 and December 31, 2017, 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: 2018 (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ 23,170 $ 23,170 $ — $ — Restricted cash and equivalents 104,930 104,930 — — Restricted investments in marketable securities 137,824 137,824 — — Total $ 265,924 $ 265,924 $ — $ — 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: 2017 (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ 54,525 $ 54,525 $ — $ — Restricted cash and equivalents 4,113 4,113 — — Restricted investments in marketable securities 126,116 126,116 — — Total $ 184,754 $ 184,754 $ — $ — |
Schedule of Carrying Amounts and Estimated Fair Values of Long-term Debt Instruments (in thousands) | September 30, 2018 December 31, 2017 Carrying Value Fair Value Carrying Value Fair Value Asset based lending facilities $ 403,110 $ 403,110 $ — $ — Revolving credit facilities — — 303,091 303,091 Term loan agreements 183,043 183,043 120,706 120,706 Real estate loans 313,730 313,730 281,039 281,039 HUD insured loans 182,656 181,837 263,827 250,768 Notes payable 80,794 80,794 68,122 68,122 Mortgages and other secured debt (recourse) 13,857 13,857 12,536 12,536 Mortgages and other secured debt (non-recourse) 26,835 26,835 27,978 27,978 $ 1,204,025 $ 1,203,206 $ 1,077,299 $ 1,064,240 |
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, 2018 September 30, 2018 Assets: Property and equipment, net $ 2,919,584 $ 88,008 Goodwill 85,642 — Intangible assets, net 125,386 2,061 Impairment Charges - Carrying Value Nine months ended December 31, 2017 September 30, 2017 Assets: Property and equipment, net $ 3,413,599 $ 163,364 Goodwill 85,642 351,470 Intangible assets, net 142,976 8,576 |
Assets Held for Sale (Tables)
Assets Held for Sale (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Assets held for sale. | |
Summary of Balance Sheet and Income Statement Information for Disposal Group (in thousands) | September 30, 2018 Current assets: Prepaid expenses $ 9,533 Long-term assets: Property and equipment, net of accumulated depreciation of $26,145 99,718 Total assets $ 109,251 Current liabilities: Current installments of long-term debt $ 2,123 Long-term liabilities: Long-term debt 86,137 Financing obligations 19,670 Total liabilities $ 107,930 |
General Information (Details)
General Information (Details) $ in Thousands | Jan. 01, 2018USD ($)leaseitem | Sep. 30, 2018state | Sep. 30, 2017 | Sep. 30, 2018statefacility | Sep. 30, 2017 |
Concentration risk | |||||
Concentration risk (as a percent) | 100.00% | 100.00% | |||
Going concern | |||||
Estimated reduction to annual cash fixed charges | $ 62,000 | ||||
Estimated additional cash and borrowing availability | $ 70,000 | ||||
Number of material master leases that did not amend financial covenants | lease | 2 | ||||
Number of counterparties issuing compliance waivers | item | 2 | ||||
ASU 2014-09 | |||||
Recently Adopted Accounting Pronouncements | |||||
Cumulative effect on opening balance of accumulated deficit | $ 0 | ||||
Revenue | Product Concentration Risk | |||||
Concentration risk | |||||
Concentration risk (as a percent) | 100.00% | 100.00% | |||
Rehabilitation therapy service | |||||
Concentration risk | |||||
Concentration risk (as a percent) | 10.80% | 11.60% | |||
Rehabilitation therapy service | Revenue | Product Concentration Risk | |||||
Concentration risk | |||||
Concentration risk (as a percent) | 11.10% | 11.30% | |||
Inpatient Services | |||||
Facility Count | |||||
Number of skilled nursing, assisted/senior living and behavioral health centers through which inpatient services are provided | facility | 445 | ||||
Number of states with facilities | state | 30 | 30 | |||
Concentration risk | |||||
Concentration risk (as a percent) | 86.70% | 85.80% | |||
Inpatient Services | Revenue | Product Concentration Risk | |||||
Concentration risk | |||||
Concentration risk (as a percent) | 86.10% | 86.00% |
Certain Significant Risks and_3
Certain Significant Risks and Uncertainties - Revenue Sources (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenue Sources | ||||
Concentration Risk, Percentage | 100.00% | 100.00% | ||
Inpatient Services | ||||
Revenue Sources | ||||
Concentration Risk, Percentage | 86.70% | 85.80% | ||
Government contracts | Inpatient Services | ||||
Revenue Sources | ||||
Concentration Risk, Percentage | 100.00% | 100.00% | 100.00% | 100.00% |
Government contracts | Medicare | Inpatient Services | ||||
Revenue Sources | ||||
Concentration Risk, Percentage | 21.00% | 22.00% | 22.00% | 23.00% |
Government contracts | Medicaid | Inpatient Services | ||||
Revenue Sources | ||||
Concentration Risk, Percentage | 58.00% | 57.00% | 57.00% | 56.00% |
Government contracts | Insurance | Inpatient Services | ||||
Revenue Sources | ||||
Concentration Risk, Percentage | 12.00% | 12.00% | 12.00% | 12.00% |
Government contracts | Private | Inpatient Services | ||||
Revenue Sources | ||||
Concentration Risk, Percentage | 8.00% | 8.00% | 8.00% | 8.00% |
Government contracts | Other | Inpatient Services | ||||
Revenue Sources | ||||
Concentration Risk, Percentage | 1.00% | 1.00% | 1.00% | 1.00% |
Government contracts | Revenue | Medicare and Medicaid | Inpatient Services | ||||
Revenue Sources | ||||
Concentration Risk, Percentage | 79.00% |
Certain Significant Risks and_4
Certain Significant Risks and Uncertainties - Concentration of Credit Risk (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018USD ($) | Sep. 30, 2017 | Sep. 30, 2018USD ($)customer | |
Concentration Risk | |||
Concentration risk (as a percent) | 100.00% | 100.00% | |
Credit Concentration Risk [Member] | Accounts Receivable | Minimum | Rehabilitation Services | |||
Concentration Risk | |||
Number of distinct customers | 200 | ||
Credit Concentration Risk [Member] | Group Of Largest Customers | Accounts Receivable | Rehabilitation Services | |||
Concentration Risk | |||
Concentration risk (as a percent) | 52.00% | ||
Number of largest customers representing approximately 68% of the outstanding contract receivables | 4 | ||
Contract receivables, net | $ | $ 56.8 | $ 56.8 | |
Credit Concentration Risk [Member] | Related Party Customer | Accounts Receivable | Rehabilitation Services | |||
Concentration Risk | |||
Concentration risk (as a percent) | 28.00% | ||
Number of customers representing approximately 54% of the outstanding contract receivables | 1 | ||
Contract receivables, net | $ | $ 30.1 | $ 30.1 |
Significant Transactions and _2
Significant Transactions and Events - Restructuring Transactions (Details) $ / shares in Units, $ in Millions | Jan. 01, 2019 | Apr. 01, 2018 | Feb. 21, 2018USD ($)$ / sharesshares | Jan. 01, 2018USD ($)lease | Sep. 30, 2018$ / shares | Mar. 06, 2018shares | Dec. 31, 2017$ / shares |
Estimated reduction to annual cash fixed charges | $ 62 | ||||||
Estimated additional cash and borrowing availability | $ 70 | ||||||
Number of material master leases that did not amend financial covenants | lease | 2 | ||||||
Welltower Master Lease Amendment | |||||||
Master Leases | |||||||
Amount of reduction to annual base rent payment | $ 35 | ||||||
Percentage of Annual Escalators | 2.50% | 2.90% | |||||
Period of extension of initial term of master lease | 5 years | ||||||
Period of extension of the renewal term of the master lease | 5 years | ||||||
Incremental rent reset cap | $ 35 | ||||||
Omnibus Agreement | Term Loan 2018 Amendment | |||||||
Omnibus Agreement [Abstract] | |||||||
Debt Instrument, Face Amount | $ 40 | ||||||
Forecast | Welltower Master Lease Amendment | |||||||
Master Leases | |||||||
Percentage of Annual Escalators | 2.00% | ||||||
Welltower Inc | Omnibus Agreement | |||||||
Omnibus Agreement [Abstract] | |||||||
Debt Instrument, Term | 10 years | ||||||
Amount of debt to be written off upon satisfying certain conditions | $ 50 | ||||||
Paid-in-kind interest rate | 2.00% | ||||||
Welltower Warrant | Omnibus Agreement | |||||||
Omnibus Agreement [Abstract] | |||||||
Exercise price of warrant | $ / shares | $ 1.33 | ||||||
Minimum | Term Loan 2018 Amendment | |||||||
Omnibus Agreement [Abstract] | |||||||
Paid-in-kind interest rate | 5.00% | ||||||
Minimum | Welltower Warrant | |||||||
Omnibus Agreement [Abstract] | |||||||
Period from date of issuance that warrant may be exercised | 6 months | ||||||
Maximum | Term Loan 2018 Amendment | |||||||
Omnibus Agreement [Abstract] | |||||||
Paid-in-kind interest rate | 9.00% | ||||||
Maximum | Welltower Inc | Omnibus Agreement | |||||||
Omnibus Agreement [Abstract] | |||||||
Amount of outstanding real estate bridge loans that may be converted into equity upon satisfying certain conditions | $ 50 | ||||||
Maximum | Welltower Warrant | |||||||
Omnibus Agreement [Abstract] | |||||||
Period from date of issuance that warrant may be exercised | 5 years | ||||||
Class A Common Stock | |||||||
Omnibus Agreement [Abstract] | |||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |||||
Class A Common Stock | Welltower Warrant | Omnibus Agreement | |||||||
Omnibus Agreement [Abstract] | |||||||
Number of shares per warrant | shares | 900,000 | ||||||
Class A Common Stock | Omega Warrant | Omnibus Agreement | |||||||
Omnibus Agreement [Abstract] | |||||||
Number of shares per warrant | shares | 600,000 |
Significant Transactions and _3
Significant Transactions and Events - Lease Transactions and Divestitures (Details) $ in Thousands | Oct. 01, 2018USD ($) | Sep. 07, 2018USD ($)facility | Aug. 01, 2018USD ($)facility | Jun. 30, 2018facility | Jun. 29, 2018USD ($)statefacilityitem | Jun. 13, 2018USD ($)facility | Jun. 13, 2018facility | Jun. 01, 2018USD ($)facility | May 04, 2018USD ($)facility | Apr. 01, 2018USD ($)facility | Nov. 01, 2016item | May 04, 2018facility | Sep. 30, 2018USD ($)facility | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)facility | Sep. 30, 2017USD ($) |
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number Of Facilities Sold | item | 64 | |||||||||||||||
Other Nonoperating Income (Expense) | $ 20,207 | $ (2,379) | $ 42,360 | $ (15,602) | ||||||||||||
Behavioral Outpatient Clinic | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number of facilities that were divested, the lease was amended or the lease expired | facility | 1 | |||||||||||||||
Divestiture | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number of facilities divested or closed | facility | 5 | 13 | ||||||||||||||
Annual revenues | $ 28,500 | |||||||||||||||
Pretax net loss | $ 2,900 | |||||||||||||||
Number of facilities that were divested, the lease was amended or the lease expired | facility | 6 | |||||||||||||||
Amount of capital lease asset write-down due to divestiture | $ 16,800 | |||||||||||||||
Amount of net financing obligation asset write-down due to divestiture | 126,100 | |||||||||||||||
Lease termination | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Gain (loss) on contract termination | $ (3,500) | |||||||||||||||
Massachusetts Kentucky And California | Lease termination | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number of facilities terminated from master lease agreement | facility | 6 | |||||||||||||||
Pennsylvania And New Jersey | Divestiture | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number of facilities divested or closed | facility | 12 | |||||||||||||||
Annual revenues | $ 146,200 | |||||||||||||||
Pretax net loss | 19,300 | |||||||||||||||
Pennsylvania And New Jersey | Lease termination | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Accelerated depreciation expense on property and equipment released at lease termination | 5,300 | |||||||||||||||
Texas | Disposed by sale | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number of facilities presented as assets held for sale | facility | 23 | 23 | ||||||||||||||
Texas | Lease termination | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number Of Facilities Sold | facility | 1 | |||||||||||||||
Annual revenues | $ 8,200 | |||||||||||||||
Pretax net loss | 2,000 | |||||||||||||||
Lease termination costs | 3,500 | |||||||||||||||
Divestiture exit costs | $ 300 | |||||||||||||||
Texas | Assets held for sale. | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number Of Facilities Sold | 16 | |||||||||||||||
Divestiture exit costs | $ 4,800 | |||||||||||||||
Other (income) loss | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Gain (loss) recognized in disposal group | $ 42,400 | |||||||||||||||
Sabra Master Leases | Lease termination | Skilled Nursing Facilities And Assisted Senior Living Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Accelerated depreciation expense on property and equipment released at lease termination | $ 3,600 | |||||||||||||||
Annual rent credit | 7,400 | |||||||||||||||
Gain (loss) on contract termination | $ 2,900 | |||||||||||||||
Sabra Master Leases | Massachusetts | Lease termination | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number of facilities terminated from master lease agreement | facility | 3 | |||||||||||||||
Sabra Master Leases | Kentucky | Lease termination | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number of facilities terminated from master lease agreement | facility | 2 | |||||||||||||||
Sabra Master Leases | California | Lease termination | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Gain (loss) on contract termination | $ 700 | |||||||||||||||
Sabra Master Leases | Florida And New Hampshire | Lease termination | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Accelerated depreciation expense on property and equipment released at lease termination | $ 6,000 | |||||||||||||||
Annual rent credit | 12,000 | |||||||||||||||
Gain (loss) on contract termination | $ 7,000 | |||||||||||||||
Welltower - Second Spring | Sale and lease termination | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Amount of capital lease asset write-down due to divestiture | 16,800 | |||||||||||||||
Amount of net financing obligation asset write-down due to divestiture | 113,300 | |||||||||||||||
Amount of financing obligation write-down | 134,500 | |||||||||||||||
Net gain on write-down of financing obligations net of financing obligation assets | 21,200 | |||||||||||||||
Divestiture exit costs | $ 6,300 | |||||||||||||||
New Landlord Lease Agreement | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Initial lease term | 10 years | |||||||||||||||
Period of extension of the renewal term of the master lease | 5 years | |||||||||||||||
Number of lease renewal options | item | 1 | |||||||||||||||
Initial annual rent | $ 7,400 | |||||||||||||||
Sabra | Sale and lease termination | Skilled Nursing Facilities And Assisted Senior Living Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number of states sold facilities are located | state | 7 | |||||||||||||||
Sabra | Sale and lease termination | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number Of Facilities Sold | facility | 8 | 12 | ||||||||||||||
Sabra | Sale and lease termination | Assisted Senior Living Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number Of Facilities Sold | facility | 1 | |||||||||||||||
Sabra | California | Sale and lease termination | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number Of Facilities Sold | facility | 1 | |||||||||||||||
Sabra | Florida | Sale and lease termination | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number Of Facilities Sold | facility | 5 | |||||||||||||||
Sabra | New Hampshire | Sale and lease termination | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number Of Facilities Sold | facility | 7 | |||||||||||||||
Sabra | OHIO | Sale and lease termination | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number Of Facilities Sold | facility | 1 | |||||||||||||||
Annual revenues | $ 3,200 | |||||||||||||||
Pretax net loss | 800 | |||||||||||||||
Annual rent credit | $ 600 | |||||||||||||||
Second Spring Healthcare Investments | Pennsylvania | Sale and lease termination | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number Of Facilities Sold | facility | 1 | 8 | ||||||||||||||
Annual revenues | $ 15,700 | |||||||||||||||
Pretax net loss | 1,900 | |||||||||||||||
Accelerated depreciation expense on property and equipment released at lease termination | 800 | |||||||||||||||
Amount of financing obligation net asset and a financing obligation write-down | 12,800 | |||||||||||||||
Divestiture exit costs | $ 800 | |||||||||||||||
Second Spring Healthcare Investments | New Jersey | Sale and lease termination | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number Of Facilities Sold | facility | 4 | |||||||||||||||
Welltower | Sale and lease termination | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number Of Facilities Sold | facility | 3 | |||||||||||||||
Amount of capital lease asset write-down due to divestiture | $ 29,500 | |||||||||||||||
Amount of net financing obligation asset write-down due to divestiture | $ 2,200 | |||||||||||||||
Welltower | Maryland and Indiana | Sale and lease termination | Skilled Nursing Facilities | ||||||||||||||||
Skilled Nursing Facility Divestitures | ||||||||||||||||
Number Of Facilities Sold | facility | 3 | |||||||||||||||
Annual revenues | $ 40,100 | |||||||||||||||
Pretax net loss | 4,500 | |||||||||||||||
Accelerated depreciation expense on property and equipment released at lease termination | 6,500 | |||||||||||||||
Amount of capital lease and financing obligation net asset write-down | 31,700 | |||||||||||||||
Amount of capital lease obligation and financing obligation write-down | 64,200 | |||||||||||||||
Net gain on write-down of financing obligations net of financing obligation assets | 31,700 | |||||||||||||||
Divestiture exit costs | $ 2,000 |
Net Revenues and Accounts Rec_3
Net Revenues and Accounts Receivable - Adoption of ASC 606 (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Practical expedient | |||||
Practical Expedient | true | ||||
Allowance for doubtful accounts | $ 313,357 | ||||
Operating expenses | $ 371,064 | $ 400,086 | $ 1,125,779 | $ 1,162,223 | |
Contract liabilities | 0 | 0 | |||
Calculated under Revenue Guidance in Effect before Topic 606 | ASU 2014-09 | |||||
Practical expedient | |||||
Allowance for doubtful accounts | 198,800 | 198,800 | |||
Impact of applying ASC 606 | ASU 2014-09 | |||||
Practical expedient | |||||
Price concessions recorded as a direct reduction to net revenue | $ 20,600 | $ 67,400 | |||
Operating expenses | 25,200 | 72,700 | |||
Provision for losses on accounts receivable | $ 25,200 | $ 72,700 |
Net Revenues and Accounts Rec_4
Net Revenues and Accounts Receivable - Disaggregation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation of revenue | ||||
Total net revenues | $ 1,217,271 | $ 1,315,452 | $ 3,790,703 | $ 4,045,860 |
Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 1,315,452 | 4,045,860 | ||
Inpatient Services | ||||
Disaggregation of revenue | ||||
Total net revenues | 1,054,668 | 3,265,608 | ||
Inpatient Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 1,129,635 | 3,482,145 | ||
Rehabilitation therapy service | ||||
Disaggregation of revenue | ||||
Total net revenues | 132,164 | 421,782 | ||
Rehabilitation therapy service | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 151,898 | 456,006 | ||
Other Services | ||||
Disaggregation of revenue | ||||
Total net revenues | 30,439 | 103,313 | ||
Other Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 33,919 | 107,709 | ||
Medicare | ||||
Disaggregation of revenue | ||||
Net revenues | 239,138 | 769,063 | ||
Medicare | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 271,197 | 864,472 | ||
Medicare | Inpatient Services | ||||
Disaggregation of revenue | ||||
Net revenues | 216,382 | 700,202 | ||
Medicare | Inpatient Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 248,436 | 793,641 | ||
Medicare | Rehabilitation therapy service | ||||
Disaggregation of revenue | ||||
Net revenues | 22,756 | 68,861 | ||
Medicare | Rehabilitation therapy service | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 22,761 | 70,831 | ||
Medicaid | ||||
Disaggregation of revenue | ||||
Net revenues | 614,084 | 1,856,290 | ||
Medicaid | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 641,919 | 1,913,267 | ||
Medicaid | Inpatient Services | ||||
Disaggregation of revenue | ||||
Net revenues | 613,539 | 1,854,706 | ||
Medicaid | Inpatient Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 641,378 | 1,912,130 | ||
Medicaid | Rehabilitation therapy service | ||||
Disaggregation of revenue | ||||
Net revenues | 545 | 1,584 | ||
Medicaid | Rehabilitation therapy service | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 541 | 1,137 | ||
Insurance | ||||
Disaggregation of revenue | ||||
Net revenues | 130,472 | 418,909 | ||
Insurance | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 124,388 | 435,977 | ||
Insurance | Inpatient Services | ||||
Disaggregation of revenue | ||||
Net revenues | 125,060 | 400,889 | ||
Insurance | Inpatient Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 118,356 | 417,619 | ||
Insurance | Rehabilitation therapy service | ||||
Disaggregation of revenue | ||||
Net revenues | 5,412 | 18,020 | ||
Insurance | Rehabilitation therapy service | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 6,032 | 18,358 | ||
Private | ||||
Disaggregation of revenue | ||||
Total net revenues | 85,287 | 259,278 | ||
Private | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 96,726 | 293,955 | ||
Private | Inpatient Services | ||||
Disaggregation of revenue | ||||
Total net revenues | 85,148 | 258,887 | ||
Private | Inpatient Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 96,583 | 293,455 | ||
Private | Rehabilitation therapy service | ||||
Disaggregation of revenue | ||||
Net revenues | 139 | 391 | ||
Private | Rehabilitation therapy service | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 143 | 500 | ||
Assisted living | Inpatient Services | ||||
Disaggregation of revenue | ||||
Total net revenues | 24,000 | 71,200 | ||
Assisted living | Inpatient Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 24,200 | 72,300 | ||
Third party providers | ||||
Disaggregation of revenue | ||||
Net revenues | 117,846 | 382,515 | ||
Third party providers | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 139,863 | 423,077 | ||
Third party providers | Rehabilitation therapy service | ||||
Disaggregation of revenue | ||||
Net revenues | 99,851 | 319,015 | ||
Third party providers | Rehabilitation therapy service | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 118,478 | 353,026 | ||
Third party providers | Other Services | ||||
Disaggregation of revenue | ||||
Net revenues | 17,995 | 63,500 | ||
Third party providers | Other Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 21,385 | 70,051 | ||
Other | ||||
Disaggregation of revenue | ||||
Net revenues | 30,444 | 104,648 | ||
Other | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 41,359 | 115,112 | ||
Other | Inpatient Services | ||||
Disaggregation of revenue | ||||
Net revenues | 14,539 | 50,924 | ||
Other | Inpatient Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 24,882 | 65,300 | ||
Other | Rehabilitation therapy service | ||||
Disaggregation of revenue | ||||
Net revenues | 3,461 | 13,911 | ||
Other | Rehabilitation therapy service | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | 3,943 | 12,154 | ||
Other | Other Services | ||||
Disaggregation of revenue | ||||
Net revenues | $ 12,444 | $ 39,813 | ||
Other | Other Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Total net revenues | $ 12,534 | $ 37,658 |
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, 2018USD ($)$ / sharesshares | Sep. 30, 2017USD ($)$ / sharesshares | Sep. 30, 2018USD ($)class$ / sharesshares | Sep. 30, 2017USD ($)$ / 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 | $ (91,901) | $ (615,022) | $ (263,431) | $ (804,117) |
Less: Net loss attributable to noncontrolling interests | (33,773) | (241,200) | (97,153) | (314,446) |
Loss from continuing operations attributable to Genesis Healthcare, Inc. | (58,128) | (373,822) | (166,278) | (489,671) |
Loss income from discontinued operations, net of taxes | (2) | (70) | ||
Net loss attributable to Genesis Healthcare, Inc | $ (58,128) | $ (373,824) | $ (166,278) | $ (489,741) |
Denominator: | ||||
Weighted-average shares outstanding for net loss per share | shares | 102,489 | 94,940 | 100,461 | 93,376 |
Basic and diluted net loss per common share: | ||||
Loss from continuing operations attributable to Genesis Healthcare, Inc. | $ / shares | $ (0.57) | $ (3.94) | $ (1.66) | $ (5.24) |
Net loss attributable to Genesis Healthcare, Inc. | $ / shares | $ (0.57) | $ (3.94) | $ (1.66) | $ (5.24) |
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) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Number of units attributed to the noncontrolling interests outstanding | 59,700 | 59,700 | ||
Convertible note | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares | 3,000 | 3,000 | ||
Noncontrolling interests | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares | 59,711 | 61,692 | 60,289 | 62,108 |
Stock Warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares | 1,500 | 1,359 | ||
Restricted Stock Units (RSUs) | Employee And Non-employee Director | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares | 266 | 40 | 691 | 988 |
Segment Information - Segment R
Segment Information - Segment Reporting (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)segment | Sep. 30, 2017USD ($) | |
Segment Reporting Information | ||||
Number of Reportable Segments | segment | 3 | |||
Net revenues | $ 1,217,271 | $ 1,315,452 | $ 3,790,703 | $ 4,045,860 |
Concentration Risk, Percentage | 100.00% | 100.00% | ||
Increase (Decrease) in Net Revenue From Prior Period | $ (98,181) | (255,157) | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (7.50%) | |||
Net revenues | $ 1,217,271 | $ 1,315,452 | 3,790,703 | |
Salaries, wages and benefits | 680,604 | 739,404 | 2,122,128 | 2,303,300 |
Other operating expenses | 371,064 | 400,086 | 1,125,779 | 1,162,223 |
General and administrative costs | 35,482 | 41,420 | 114,404 | 127,657 |
Lease expense | 32,366 | 38,670 | 97,548 | 113,004 |
Depreciation and amortization expense | 53,038 | 59,390 | 168,036 | 183,986 |
Interest expense | 115,695 | 124,431 | 348,687 | 373,473 |
Loss on early extinguishment of debt | 9,785 | 2,301 | ||
Investment income | (2,178) | (1,596) | (4,856) | (4,097) |
Other (income) loss | (20,207) | 2,379 | (42,360) | 15,602 |
Transaction costs | 11,361 | 1,056 | 26,567 | 7,862 |
Customer receivership and other related charges | 297 | 35,864 | ||
Long-lived asset impairment charges | 32,390 | 163,364 | 88,008 | 163,364 |
Goodwill and identifiable intangible asset impairments | 929 | 360,046 | 2,061 | 360,046 |
Equity in net (income) loss of unconsolidated affiliates | (152) | (69) | 106 | (291) |
Loss before income tax (benefit) expense | (93,121) | (613,426) | (265,190) | (798,434) |
Income tax benefit (expense) | (1,220) | 1,596 | (1,759) | 5,683 |
Loss from continuing operations | (91,901) | $ (615,022) | $ (263,431) | $ (804,117) |
Product Concentration Risk | Revenue | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 100.00% | 100.00% | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (6.30%) | |||
Inpatient Services | ||||
Segment Reporting Information | ||||
Net revenues | $ 1,054,668 | $ 3,265,608 | ||
Concentration Risk, Percentage | 86.70% | 85.80% | ||
Increase (Decrease) in Net Revenue From Prior Period | $ (74,967) | $ (216,537) | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (6.60%) | |||
Net revenues | $ 1,054,668 | |||
Inpatient Services | Product Concentration Risk | Revenue | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 86.10% | 86.00% | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (6.20%) | |||
Inpatient Services | Skilled Nursing Facilities | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 84.60% | 83.80% | ||
Increase (Decrease) in Net Revenue From Prior Period | $ (74,101) | $ (214,116) | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (6.70%) | |||
Net revenues | $ 1,029,453 | $ 3,190,065 | ||
Inpatient Services | Skilled Nursing Facilities | Product Concentration Risk | Revenue | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 84.00% | 84.00% | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (6.30%) | |||
Inpatient Services | Assisted Senior Living Facilities | ||||
Segment Reporting Information | ||||
Revenues outside scope of ASC 606 | $ 23,974 | $ 71,220 | ||
Concentration Risk, Percentage | 2.00% | 1.80% | ||
Increase (Decrease) in Net Revenue From Prior Period | $ (211) | $ (1,042) | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (0.90%) | |||
Inpatient Services | Assisted Senior Living Facilities | Product Concentration Risk | Revenue | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 1.90% | 1.80% | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (1.40%) | |||
Inpatient Services | Administration of third party facilities | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 0.20% | 0.20% | ||
Increase (Decrease) in Net Revenue From Prior Period | $ (241) | $ (264) | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (10.60%) | |||
Net revenues | $ 2,025 | $ 6,577 | ||
Inpatient Services | Administration of third party facilities | Product Concentration Risk | Revenue | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 0.20% | 0.20% | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (3.90%) | |||
Rehabilitation therapy service | ||||
Segment Reporting Information | ||||
Net revenues | $ 132,164 | $ 421,782 | ||
Concentration Risk, Percentage | 10.80% | 11.60% | ||
Increase (Decrease) in Net Revenue From Prior Period | $ (19,734) | (34,224) | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (13.00%) | |||
Net revenues | $ 132,164 | $ 421,782 | ||
Rehabilitation therapy service | Product Concentration Risk | Revenue | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 11.10% | 11.30% | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (7.50%) | |||
Rehabilitation therapy service | Therapy Services | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 17.60% | 18.60% | ||
Increase (Decrease) in Net Revenue From Prior Period | $ (30,050) | $ (57,933) | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (12.30%) | |||
Net revenues | $ 214,421 | $ 685,672 | ||
Rehabilitation therapy service | Therapy Services | Product Concentration Risk | Revenue | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 18.10% | 18.40% | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (7.80%) | |||
Other Services | ||||
Segment Reporting Information | ||||
Net revenues | $ 30,439 | $ 103,313 | ||
Concentration Risk, Percentage | 2.50% | 2.60% | ||
Increase (Decrease) in Net Revenue From Prior Period | $ (3,480) | (4,396) | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (10.30%) | |||
Net revenues | $ 30,439 | $ 103,313 | ||
Other Services | Product Concentration Risk | Revenue | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 2.80% | 2.70% | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (4.10%) | |||
Other Services | Other Services | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 3.90% | 3.30% | ||
Increase (Decrease) in Net Revenue From Prior Period | $ 4,076 | $ 13,662 | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | 9.50% | |||
Net revenues | $ 46,977 | $ 146,830 | ||
Other Services | Other Services | Product Concentration Risk | Revenue | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | 3.90% | 3.30% | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | 10.30% | |||
Operating Segments | Inpatient Services | ||||
Segment Reporting Information | ||||
Net revenues | 1,055,452 | $ 1,130,005 | $ 3,267,862 | |
Salaries, wages and benefits | 480,345 | 507,075 | 1,477,153 | $ 1,597,007 |
Other operating expenses | 428,398 | 464,894 | 1,323,423 | 1,365,896 |
Lease expense | 31,732 | 37,895 | 95,660 | 110,661 |
Depreciation and amortization expense | 46,472 | 51,666 | 147,552 | 159,483 |
Interest expense | 91,106 | 103,306 | 277,753 | 309,948 |
Other (income) loss | (20,207) | 2,379 | (42,438) | 15,112 |
Long-lived asset impairment charges | 32,390 | 161,483 | 88,008 | 161,483 |
Goodwill and identifiable intangible asset impairments | 929 | 360,046 | 2,061 | 360,046 |
Loss before income tax (benefit) expense | (35,713) | (558,739) | (101,310) | (596,352) |
Loss from continuing operations | (35,713) | (558,739) | (101,310) | (596,352) |
Operating Segments | Rehabilitation therapy service | ||||
Segment Reporting Information | ||||
Net revenues | 214,421 | 244,471 | 685,672 | |
Salaries, wages and benefits | 175,098 | 205,232 | 562,875 | 619,928 |
Other operating expenses | 12,891 | 21,429 | 41,707 | 65,074 |
Lease expense | (14) | |||
Depreciation and amortization expense | 3,147 | 3,497 | 9,479 | 11,110 |
Interest expense | 14 | 14 | 41 | 42 |
Other (income) loss | 732 | |||
Customer receivership and other related charges | 297 | 35,864 | ||
Long-lived asset impairment charges | 1,881 | 1,881 | ||
Loss before income tax (benefit) expense | 23,271 | 12,135 | 71,570 | 8,974 |
Loss from continuing operations | 23,271 | 12,135 | 71,570 | 8,974 |
Operating Segments | Other Services | ||||
Segment Reporting Information | ||||
Net revenues | 46,914 | 42,778 | 146,714 | |
Salaries, wages and benefits | 25,161 | 27,097 | 82,100 | 86,365 |
Other operating expenses | 29,353 | 15,689 | 70,310 | 45,451 |
Lease expense | 316 | 302 | 959 | 897 |
Depreciation and amortization expense | 172 | 167 | 509 | 506 |
Interest expense | 9 | 9 | 27 | 28 |
Other (income) loss | 78 | |||
Loss before income tax (benefit) expense | (8,097) | (486) | (7,269) | (529) |
Loss from continuing operations | (8,097) | (486) | (7,269) | (529) |
Corporate, Non-Segment | ||||
Segment Reporting Information | ||||
Net revenues | 63 | 123 | 116 | |
General and administrative costs | 35,482 | 41,420 | 114,404 | 127,657 |
Lease expense | 318 | 487 | 929 | 1,446 |
Depreciation and amortization expense | 3,247 | 4,060 | 10,496 | 12,887 |
Interest expense | 24,566 | 21,102 | 70,866 | 63,455 |
Loss on early extinguishment of debt | 9,785 | 2,301 | ||
Investment income | (2,178) | (1,596) | (4,856) | (4,097) |
Other (income) loss | (242) | |||
Transaction costs | 11,361 | 1,056 | 26,567 | 7,862 |
Equity in net (income) loss of unconsolidated affiliates | (523) | (571) | (1,029) | (1,702) |
Loss before income tax (benefit) expense | (72,210) | (65,835) | (227,046) | (209,117) |
Income tax benefit (expense) | (1,220) | 1,596 | (1,759) | 5,683 |
Loss from continuing operations | (70,990) | (67,431) | (225,287) | (214,800) |
Elimination | ||||
Segment Reporting Information | ||||
Net revenues | (99,579) | (101,925) | (309,661) | |
Other operating expenses | (99,578) | (101,926) | (309,661) | (314,198) |
Equity in net (income) loss of unconsolidated affiliates | 371 | 502 | 1,135 | 1,411 |
Loss before income tax (benefit) expense | (372) | (501) | (1,135) | (1,410) |
Loss from continuing operations | $ (372) | $ (501) | (1,135) | $ (1,410) |
Elimination | Inpatient Services | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | (0.10%) | |||
Increase (Decrease) in Net Revenue From Prior Period | $ (414) | (1,115) | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | 111.90% | |||
Net revenues | $ (784) | $ (2,254) | ||
Elimination | Inpatient Services | Product Concentration Risk | Revenue | ||||
Segment Reporting Information | ||||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | 97.90% | |||
Elimination | Rehabilitation therapy service | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | (6.80%) | (7.00%) | ||
Increase (Decrease) in Net Revenue From Prior Period | $ 10,316 | $ 23,709 | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (11.10%) | |||
Net revenues | $ (82,257) | $ (263,890) | ||
Elimination | Rehabilitation therapy service | Product Concentration Risk | Revenue | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | (7.00%) | (7.10%) | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (8.20%) | |||
Elimination | Other Services | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | (1.40%) | (0.70%) | ||
Increase (Decrease) in Net Revenue From Prior Period | $ (7,556) | $ (18,058) | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | 84.10% | |||
Net revenues | $ (16,538) | $ (43,517) | ||
Elimination | Other Services | Product Concentration Risk | Revenue | ||||
Segment Reporting Information | ||||
Concentration Risk, Percentage | (1.10%) | (0.60%) | ||
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | 70.90% | |||
Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Segment Reporting Information | ||||
Net revenues | $ 1,315,452 | $ 4,045,860 | ||
Net revenues | 4,045,860 | |||
Calculated under Revenue Guidance in Effect before Topic 606 | Inpatient Services | ||||
Segment Reporting Information | ||||
Net revenues | 1,129,635 | 3,482,145 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Inpatient Services | Skilled Nursing Facilities | ||||
Segment Reporting Information | ||||
Net revenues | 1,103,554 | 3,404,181 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Inpatient Services | Assisted Senior Living Facilities | ||||
Segment Reporting Information | ||||
Net revenues | 24,185 | 72,262 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Inpatient Services | Administration of third party facilities | ||||
Segment Reporting Information | ||||
Net revenues | 2,266 | 6,841 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Rehabilitation therapy service | ||||
Segment Reporting Information | ||||
Net revenues | 151,898 | 456,006 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Rehabilitation therapy service | Therapy Services | ||||
Segment Reporting Information | ||||
Net revenues | 244,471 | 743,605 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Other Services | ||||
Segment Reporting Information | ||||
Net revenues | 33,919 | 107,709 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Other Services | Other Services | ||||
Segment Reporting Information | ||||
Net revenues | 42,901 | 133,168 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Operating Segments | Inpatient Services | ||||
Segment Reporting Information | ||||
Net revenues | 3,483,284 | |||
Calculated under Revenue Guidance in Effect before Topic 606 | Operating Segments | Rehabilitation therapy service | ||||
Segment Reporting Information | ||||
Net revenues | 743,605 | |||
Calculated under Revenue Guidance in Effect before Topic 606 | Operating Segments | Other Services | ||||
Segment Reporting Information | ||||
Net revenues | 132,718 | |||
Calculated under Revenue Guidance in Effect before Topic 606 | Corporate, Non-Segment | ||||
Segment Reporting Information | ||||
Net revenues | 450 | |||
Calculated under Revenue Guidance in Effect before Topic 606 | Elimination | ||||
Segment Reporting Information | ||||
Net revenues | (314,197) | |||
Calculated under Revenue Guidance in Effect before Topic 606 | Elimination | Inpatient Services | ||||
Segment Reporting Information | ||||
Net revenues | (370) | (1,139) | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Elimination | Rehabilitation therapy service | ||||
Segment Reporting Information | ||||
Net revenues | (92,573) | (287,599) | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Elimination | Other Services | ||||
Segment Reporting Information | ||||
Net revenues | $ (8,982) | $ (25,459) |
Segment Information - Assets an
Segment Information - Assets and Goodwill by Segment (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Segment Reporting, Asset Reconciling Item | ||
Segment total assets | $ 4,391,374 | $ 4,787,865 |
Goodwill | 437,112 | 437,112 |
Accumulated impairment losses | (351,470) | (351,470) |
Segment goodwill | 85,642 | 85,642 |
Corporate and Eliminations | ||
Segment Reporting, Asset Reconciling Item | ||
Segment total assets | 142,770 | 82,657 |
Inpatient Services | ||
Segment Reporting, Asset Reconciling Item | ||
Segment total assets | 3,865,304 | 4,303,370 |
Goodwill | 351,470 | 351,470 |
Accumulated impairment losses | (351,470) | (351,470) |
Rehabilitation therapy service | ||
Segment Reporting, Asset Reconciling Item | ||
Segment total assets | 341,139 | 351,711 |
Goodwill | 73,814 | 73,814 |
Segment goodwill | 73,814 | 73,814 |
Other Services | ||
Segment Reporting, Asset Reconciling Item | ||
Segment total assets | 42,161 | 50,127 |
Goodwill | 11,828 | 11,828 |
Segment goodwill | $ 11,828 | $ 11,828 |
Property and Equipment (Details
Property and Equipment (Details) $ in Thousands | Apr. 01, 2018facility | Nov. 01, 2016item | Sep. 30, 2018USD ($)leasefacility | Dec. 31, 2017USD ($) |
Property, Plant and Equipment [Line Items] | ||||
Gross property and equipment | $ 3,871,789 | $ 4,352,754 | ||
Less accumulated depreciation | (952,205) | (939,155) | ||
Net property and equipment | 2,919,584 | 3,413,599 | ||
Tangible Asset Impairment Charges | $ 88,000 | |||
Lease amendments | ||||
Number of master lease agreements amended | lease | 1 | |||
Net capital lease asset write-down | $ 18,200 | |||
Number of facilities sold | item | 64 | |||
Assets held for sale | ||||
Number of facilities classified as held for sale | facility | 23 | |||
Assets Reclassified From Property And Equipment To Assets Held For Sale | $ 99,700 | |||
Divestiture | Skilled Nursing Facilities | ||||
Lease amendments | ||||
Number of facilities divested or closed | facility | 5 | 13 | ||
Amount of capital lease asset write-down due to divestiture | $ 16,800 | |||
Amount of net financing obligation asset write-down due to divestiture | $ 126,100 | |||
Welltower | Sale and lease termination | Skilled Nursing Facilities | ||||
Lease amendments | ||||
Number of facilities sold | facility | 3 | |||
Amount of capital lease asset write-down due to divestiture | $ 29,500 | |||
Amount of net financing obligation asset write-down due to divestiture | 2,200 | |||
Land, Buildings and Improvements | ||||
Property, Plant and Equipment [Line Items] | ||||
Gross property and equipment | 472,553 | 591,022 | ||
Capital lease land, buildings and improvements | ||||
Property, Plant and Equipment [Line Items] | ||||
Gross property and equipment | 684,225 | 752,657 | ||
Financing obligation land, buildings and improvements | ||||
Property, Plant and Equipment [Line Items] | ||||
Gross property and equipment | 2,283,764 | 2,525,551 | ||
Equipment, furniture and fixtures | ||||
Property, Plant and Equipment [Line Items] | ||||
Gross property and equipment | 420,335 | 453,230 | ||
Construction in progress | ||||
Property, Plant and Equipment [Line Items] | ||||
Gross property and equipment | $ 10,912 | $ 30,294 |
Long-Term Debt - (Details)
Long-Term Debt - (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Long-term debt | ||
Total long-term debt | $ 1,204,025 | $ 1,077,299 |
Current installments of long-term debt | (116,077) | (26,962) |
Long-term debt | 1,087,948 | 1,050,337 |
ABL Credit Facilities | ||
Long-term debt | ||
Total long-term debt | 403,110 | |
Debt issuance costs | 12,016 | 0 |
New term loan agreement | ||
Long-term debt | ||
Total long-term debt | 183,043 | 120,706 |
Debt issuance costs | 2,143 | 3,020 |
Debt premium | 10,670 | 0 |
Real estate loans | ||
Long-term debt | ||
Total long-term debt | 313,730 | 281,039 |
Debt issuance costs | 5,381 | 3,486 |
Debt premium | 31,408 | 0 |
HUD insured loans | ||
Long-term debt | ||
Total long-term debt | 182,656 | 263,827 |
Debt issuance costs | 5,280 | 5,590 |
Debt premium | 868 | 13,590 |
Welltower Notes | ||
Long-term debt | ||
Total long-term debt | 80,794 | 68,122 |
Mortgages and other secured debt (recourse) | ||
Long-term debt | ||
Total long-term debt | 13,857 | 12,536 |
Mortgages and other secured debt (non-recourse) | ||
Long-term debt | ||
Total long-term debt | 26,835 | 27,978 |
Debt issuance costs | 195 | 99 |
Debt premium | 1,544 | 1,618 |
Revolving Credit Facility | ||
Long-term debt | ||
Total long-term debt | 303,091 | |
Debt issuance costs | $ 0 | $ 10,109 |
Long-Term Debt - New Asset Base
Long-Term Debt - New Asset Based Lending Facilities (Details) $ in Thousands | Mar. 06, 2018USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2020USD ($) |
Debt Instrument [Line Items] | |||
Total borrowing base capacity | $ 555,000 | ||
Revolving credit facility | $ 415,125 | ||
Weighted Average Interest Rate | 8.40% | ||
ABL Credit Facilities | |||
Debt Instrument [Line Items] | |||
Number of days prior to maturity of various loan agreements that the maturity of the credit facilities may be accelerated | 90 days | ||
Restricted Cash and Cash Equivalents | $ 56,300 | ||
Term Loan And Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Termination fees, if loan repaid within next twelve months | 2 | ||
Termination fees, if loan repaid after year one and before year two | 1 | ||
Termination fees, if loan repaid after year two | 0.5 | ||
First Lien Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Debt instrument exit fees amount | $ 1,600 | ||
Total borrowing base capacity | 325,000 | ||
Revolving credit facility | $ 325,000 | ||
Weighted Average Interest Rate | 8.40% | ||
First Lien Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Debt instrument exit fees amount | $ 1,000 | ||
Revolving credit facility (Non-HUD) | |||
Debt Instrument [Line Items] | |||
Total borrowing base capacity | 155,000 | ||
Revolving credit facility | $ 60,086 | ||
Weighted Average Interest Rate | 8.40% | ||
HUD Tranche | |||
Debt Instrument [Line Items] | |||
Total borrowing base capacity | $ 45,000 | ||
Revolving credit facility | $ 30,039 | ||
Weighted Average Interest Rate | 8.40% | ||
Delayed Draw Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Total borrowing base capacity | $ 30,000 | ||
Weighted Average Interest Rate | 13.40% | ||
Delayed Draw Term Loan Facility | Forecast | |||
Debt Instrument [Line Items] | |||
Face amount of debt | $ 20,000 | ||
New Asset Based Lending Facilities | ABL Credit Facilities | |||
Debt Instrument [Line Items] | |||
Face amount of debt | $ 555,000 | ||
Term of debt | 5 years | ||
New Asset Based Lending Facilities | First Lien Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Face amount of debt | $ 325,000 | ||
New Asset Based Lending Facilities | First Lien Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Face amount of debt | 200,000 | ||
New Asset Based Lending Facilities | Delayed Draw Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Face amount of debt | $ 30,000 | ||
New Asset Based Lending Facilities | 90-Day LIBOR | Term Loan And Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Floor rate (as a percent) | 0.50% | ||
Applicable margin | 6.00% | ||
New Asset Based Lending Facilities | 90-Day LIBOR | Delayed Draw Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Floor rate (as a percent) | 1.00% | ||
Applicable margin | 11.00% | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Total borrowing base capacity | $ 456,600 | ||
Revolving credit facility | $ 415,100 | ||
Revolving Credit Facility | Delayed Draw Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Commitment fee rate (as percentage) | 2.00% | ||
Revolving Credit Facility | Long Term Debt Current | ABL Credit Facilities | |||
Debt Instrument [Line Items] | |||
Revolving credit facility | $ 90,100 | ||
Revolving Credit Facility | New Asset Based Lending Facilities | ABL Credit Facilities | |||
Debt Instrument [Line Items] | |||
Repayment in full of existing facility | $ 525,000 | ||
Minimum | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Commitment fee rate (as percentage) | 0.50% |
Long-Term Debt - Revolving Cred
Long-Term Debt - Revolving Credit Facilities (Details) $ in Millions | Jul. 29, 2016 | Sep. 30, 2018USD ($)item |
Tranche A-1 | LIBOR | Minimum | ||
Long-term debt | ||
Applicable margin | 3.00% | |
Tranche A-1 | LIBOR | Maximum | ||
Long-term debt | ||
Applicable margin | 3.50% | |
HUD Tranche | LIBOR | Minimum | ||
Long-term debt | ||
Applicable margin | 2.00% | 2.50% |
HUD Tranche | LIBOR | Maximum | ||
Long-term debt | ||
Applicable margin | 2.50% | 3.00% |
Revolving Credit Facility | ||
Long-term debt | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 525 | |
Debt Instrument Number of Tranches | item | 2 | |
Available borrowing capacity under the revolving credit facilities | $ 41.5 | |
Revolving Credit Facility | Federal Funds | ||
Long-term debt | ||
Applicable margin | 3.00% | |
Revolving Credit Facility Amendment | Tranche A-1 | Base Rate | Minimum | ||
Long-term debt | ||
Applicable margin | 2.00% | |
Revolving Credit Facility Amendment | Tranche A-1 | Base Rate | Maximum | ||
Long-term debt | ||
Applicable margin | 2.50% |
Long-Term Debt - Term Loan Agre
Long-Term Debt - Term Loan Agreement (Details) $ in Millions | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018USD ($)item | Dec. 31, 2020 | Dec. 31, 2018 | Mar. 06, 2018USD ($) | |
Term Loan Facility and New Term Loan Agreement | ||||
Weighted Average Interest Rate | 8.40% | |||
Term Loan Amendment | ||||
Term Loan Facility and New Term Loan Agreement | ||||
Weighted Average Interest Rate | 13.00% | |||
Welltower Restructuring Transactions | ||||
Term Loan Facility and New Term Loan Agreement | ||||
Effective interest rate | 7.50% | |||
Term Loan Facility | Term Loan Amendment | ||||
Term Loan Facility and New Term Loan Agreement | ||||
Fixed interest rate | 14.00% | |||
New Term Loan Facility | ||||
Term Loan Facility and New Term Loan Agreement | ||||
Outstanding principal balance under term loan facility | $ 174.5 | |||
Number of maintenance covenants | item | 4 | |||
Non-cash debt premium | $ 10.7 | |||
New Term Loan Facility | Forecast | ||||
Term Loan Facility and New Term Loan Agreement | ||||
Leverage ratio | 8.50% | 0.25% | ||
New Term Loan Facility | Maximum | ||||
Term Loan Facility and New Term Loan Agreement | ||||
Leverage ratio | 9.00% | |||
Term Loan 2018 Amendment | Term Loan Amendment | ||||
Term Loan Facility and New Term Loan Agreement | ||||
Aggregate principal amount | $ 40 | |||
Fixed interest rate | 10.00% | |||
Term Loan 2018 Amendment | Minimum | ||||
Term Loan Facility and New Term Loan Agreement | ||||
Paid-in-kind interest rate | 5.00% | |||
Term Loan 2018 Amendment | Maximum | ||||
Term Loan Facility and New Term Loan Agreement | ||||
Paid-in-kind interest rate | 9.00% | |||
Affiliate Of Welltower Inc And Affiliate Of Omega Healthcare Investors Inc | New Term Loan Facility | ||||
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 year four, percent | 5.00% |
Long-Term Debt - Real Estate Lo
Long-Term Debt - Real Estate Loans (Details) $ in Thousands | Apr. 01, 2018USD ($) | Mar. 31, 2018USD ($) | Nov. 01, 2016item | Apr. 01, 2016USD ($)facility | Sep. 30, 2018USD ($)facilityitem | Sep. 30, 2017USD ($) | Mar. 30, 2018USD ($)loan | Mar. 06, 2018 | Feb. 15, 2018 | Jan. 01, 2018 | Dec. 31, 2017USD ($) |
Long-term debt | |||||||||||
Number Of Facilities Sold | item | 64 | ||||||||||
Number of facilities classified as held for sale | facility | 23 | ||||||||||
Weighted Average Interest Rate | 8.40% | ||||||||||
Debt instrument retired | $ 462,063 | $ 109,798 | |||||||||
Real estate loans | |||||||||||
Long-term debt | |||||||||||
Non-cash debt premium | $ 31,408 | $ 0 | |||||||||
Mid Cap Real Estate Loans | |||||||||||
Long-term debt | |||||||||||
Number of real estate loans | loan | 2 | ||||||||||
Aggregate principal amount | $ 75,000 | ||||||||||
Term of debt | 5 years | ||||||||||
Amount financed with bridge loan | $ 73,000 | ||||||||||
Number of facilities pledged | facility | 18 | ||||||||||
Mid Cap Real Estate Loans | LIBOR | |||||||||||
Long-term debt | |||||||||||
Floor rate (as a percent) | 1.50% | ||||||||||
Applicable margin | 5.85% | ||||||||||
Debt Instrument Variable Interest Rate Floor | 1.50% | ||||||||||
Welltower Real Estate Loans | |||||||||||
Long-term debt | |||||||||||
Repayments of Debt | $ 69,700 | ||||||||||
Fixed interest rate | 10.25% | ||||||||||
Number of facilities pledged | item | 15 | ||||||||||
Aggregate principal balance | $ 214,700 | ||||||||||
Non-cash debt premium | 31,400 | ||||||||||
Other Real Estate Loan | |||||||||||
Long-term debt | |||||||||||
Aggregate principal amount | $ 9,900 | ||||||||||
Welltower Restructuring Transactions | |||||||||||
Long-term debt | |||||||||||
Effective interest rate | 7.50% | ||||||||||
Welltower Real Estate Loan Amendments | |||||||||||
Long-term debt | |||||||||||
Weighted Average Interest Rate | 12.00% | ||||||||||
Welltower Real Estate Loan Amendments | Welltower Real Estate Loans | |||||||||||
Long-term debt | |||||||||||
Fixed interest rate | 12.00% | ||||||||||
Paid-in-kind interest rate | 5.00% | ||||||||||
Cash interest rate | 7.00% | ||||||||||
Loan repayments or commitments secured | $ 82,000 | ||||||||||
Amount of increase to cash component of interest payments | $ 2,000 | ||||||||||
Welltower Real Estate Loan Amendments | Welltower Real Estate Loans | Minimum | |||||||||||
Long-term debt | |||||||||||
Amount that must be repaid by date certain to maintain the decreased cash pay interest rate | $ 105,000 | ||||||||||
Skilled Nursing Facilities | |||||||||||
Long-term debt | |||||||||||
Number of facilities acquired | facility | 1 |
Long-Term Debt - HUD Insured Lo
Long-Term Debt - HUD Insured Loans (Details) $ in Thousands | Nov. 01, 2016item | Sep. 30, 2018USD ($)facility | Sep. 30, 2017USD ($) | Mar. 31, 2018USD ($)facility | Dec. 31, 2017USD ($) |
Long-term debt | |||||
Principal balance outstanding, net | $ 1,204,025 | $ 1,077,299 | |||
Proceeds from issuance of long-term debt | $ 563,747 | $ 23,872 | |||
Number Of Facilities Sold | item | 64 | ||||
Number Of Facilities Classified As Held For Sale | facility | 23 | ||||
Weighted Average Interest Rate | 8.40% | ||||
HUD insured loans | |||||
Long-term debt | |||||
Principal balance outstanding, net | $ 182,656 | 263,827 | |||
Principal balance outstanding | 10,900 | ||||
Debt premium | $ 868 | $ 13,590 | |||
Debt instrument average remaining term (in years) | 29 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 | $ 26,000 | ||||
Skilled Nursing Facilities | HUD insured loans | |||||
Long-term debt | |||||
Number of debt instruments insured by HUD | facility | 31 | ||||
Principal balance outstanding | $ 276,200 | ||||
Debt premium | $ 13,200 | ||||
Number of debt instruments with a debt premium | facility | 10 | ||||
Skilled Nursing Facilities | Assets held for sale. | HUD insured loans | |||||
Long-term debt | |||||
Principal balance outstanding, net | $ 88,000 | ||||
Net debt issuance costs, debt premiums and escrow reserve funds | $ 9,500 | ||||
Number Of Facilities Classified As Held For Sale | facility | 9 |
Long-Term Debt - Notes Payable
Long-Term Debt - Notes Payable (Details) shares in Millions, $ in Millions | Jan. 17, 2018USD ($) | Nov. 13, 2017shares | Dec. 23, 2016USD ($)loanitem | Nov. 01, 2016USD ($)item | Sep. 30, 2018USD ($) |
Long-term debt | |||||
Number Of Facilities Sold | item | 64 | ||||
Short-term notes payable | |||||
Long-term debt | |||||
Debt converted | $ 19.6 | ||||
Fixed interest rate | 5.75% | ||||
Note outstanding balance | $ 9.7 | ||||
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 | 57.9 | ||||
Cash interest rate | 3.00% | ||||
Paid-in-kind interest rate | 7.00% | ||||
Aggregate principal amount | $ 51.2 | ||||
Welltower Notes Due December 2021 | |||||
Long-term debt | |||||
Number of notes issued | loan | 2 | ||||
Aggregate principal amount | $ 23.7 | ||||
Note Payable Due December 15 2021 | |||||
Long-term debt | |||||
Principal balance outstanding | $ 13.2 | ||||
Cash interest rate | 3.00% | ||||
Paid-in-kind interest rate | 7.00% | ||||
Aggregate principal amount | $ 11.7 | ||||
Convertible note payable due December 15, 2021 | |||||
Long-term debt | |||||
Aggregate principal amount | $ 12 | ||||
Number of shares issued in debt conversion | shares | 3 |
Long-Term Debt - Other (Details
Long-Term Debt - Other (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($)loan | |
Long-term debt | |
Weighted Average Interest Rate | 8.40% |
Mortgages and other secured debt (recourse) | |
Long-term debt | |
Weighted Average Interest Rate | 3.40% |
Mortgages and other secured debt (non-recourse) | |
Long-term debt | |
Weighted Average Interest Rate | 5.00% |
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 | $ 10.9 |
Long-Term Debt - Debt Covenants
Long-Term Debt - Debt Covenants (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Long-Term Debt. | ||
Current installments of long-term debt | $ 116,077 | $ 26,962 |
Twelve months ended March 31, | ||
2,019 | 116,111 | |
2,020 | 183,934 | |
2,021 | 64,490 | |
2,022 | 234,689 | |
2,023 | 407,907 | |
Thereafter | 177,419 | |
Total long-term debt | $ 1,184,550 |
Lease and Lease Commitments - F
Lease and Lease Commitments - Future Minimum Capital and Operating Lease Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Capital Leases, Future Minimum Payments Due, Rolling Maturity | ||
2,019 | $ 86,885 | |
2,020 | 85,745 | |
2,021 | 87,593 | |
2,022 | 89,516 | |
2,023 | 91,508 | |
Thereafter | 3,210,719 | |
Total future minimum lease payments | 3,651,966 | |
Less amount representing interest | (2,699,329) | |
Capital lease obligation | 952,637 | |
Less current portion | (2,164) | $ (2,511) |
Capital lease obligations | 950,473 | 1,025,355 |
Operating Leases, Future Minimum Payments Due, Rolling Maturity | ||
2,019 | 118,433 | |
2,020 | 117,352 | |
2,021 | 117,154 | |
2,022 | 94,680 | |
2,023 | 81,981 | |
Thereafter | 364,335 | |
Total future minimum lease payments | 893,935 | |
Current capital lease obligation | $ 2,164 | $ 2,511 |
Lease and Lease Commitments - C
Lease and Lease Commitments - Capital Lease Rates and Deferred Balances (Details) $ in Millions | 9 Months Ended | |
Sep. 30, 2018USD ($)leasefacility | Dec. 31, 2017USD ($) | |
Weighted average interest rate | 10.00% | |
Number of leases with unmet financial covenants | lease | 7 | |
Number of facilities under leases with unmet financial covenants | facility | 45 | |
Identifiable Intangible Assets [Member] | ||
Net favorable leases | $ | $ 25.1 | $ 34.9 |
Other long-term liabilities | ||
Net unfavorable leases | $ | 8.8 | 15.5 |
Deferred straight-line rent balances included in other long-term liabilities | $ | $ 21.6 | $ 28.7 |
Welltower - Second Spring | ||
Number of facilities in the master lease agreement | facility | 51 | |
Welltower - CBYW | ||
Number of facilities in the master lease agreement | facility | 28 |
Financing Obligations (Details)
Financing Obligations (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Mar. 06, 2018 | Dec. 31, 2017 | |
Sale Leaseback Transaction [Line Items] | |||
Weighted Average Interest Rate | 8.40% | ||
Financing obligation, imputed interest rate (as a percent) | 9.20% | ||
Present Value of Future Minimum Lease Payments, Sale Leaseback Transactions, Rolling Maturity | |||
2,019 | $ 236,208 | ||
2,020 | 240,868 | ||
2,021 | 245,657 | ||
2,022 | 241,820 | ||
2,023 | 246,329 | ||
Thereafter | 6,723,039 | ||
Total future minimum lease payments | 7,933,921 | ||
Less amount representing interest | (5,204,724) | ||
Financing obligations | 2,729,197 | ||
Less current portion | (1,947) | $ (1,878) | |
Long-term financing obligations | 2,727,250 | $ 2,929,483 | |
Welltower Restructuring Transactions | |||
Sale Leaseback Transaction [Line Items] | |||
Effective interest rate | 7.50% | ||
Welltower Master Lease Amendment | |||
Sale Leaseback Transaction [Line Items] | |||
Weighted Average Interest Rate | 7.00% | ||
Welltower Master Lease | |||
Sale Leaseback Transaction [Line Items] | |||
Non-cash financing obligation discount balance | $ 49,000 |
Income Taxes - Reconciliation (
Income Taxes - Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation | ||||
Effective tax rate | 1.30% | (0.30%) | 0.70% | (0.70%) |
Income tax (benefit) expense | $ (1,220) | $ 1,596 | $ (1,759) | $ 5,683 |
FC-GEN Operations Investment, LLC | ||||
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation | ||||
Business Acquisition, Percentage of Voting Interests Acquired | 63.10% | 63.10% |
Income Taxes - Tax Cuts And Job
Income Taxes - Tax Cuts And Jobs Act (Details) - Federal | 9 Months Ended |
Sep. 30, 2018 | |
Tax Cuts and Jobs Act | |
Period that NOLs that occurred prior to December 31, 2017 may be carried forward | 20 years |
Maximum usage limit in any given year for NOLs occurring after December 31, 2017 | 80.00% |
Income Taxes - Exchange Rights
Income Taxes - Exchange Rights and Tax Receivable Agreement (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
FC-GEN Operations Investment, LLC | ||
Goodwill Tax Deductible Amount Tax Basis Step Up | $ 9.5 | $ 14.5 |
Tax receivable agreement, potential payment as percentage of cash savings | 90.00% | |
F C Gen Units And Class C Shares | ||
Number of membership units and Class C shares exchanged for Class A shares | 1,860,592 | 2,248,869 |
Class A Common Stock | ||
Number of Class A shares issued in exchange for membership units and Class C shares | 1,860,912 | 2,249,256 |
Commitments and Contingencies -
Commitments and Contingencies - Self Insurance Risks (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Commitments and Contingencies | |||||
Workers' Compensation discount rate (as a percentage) | 2.66% | ||||
Potential effect of discounting on Workers Compensation reserve | $ 7.8 | $ 7.8 | $ 6.7 | ||
Provision for general and professional liability | 25 | $ 33.8 | 79.2 | $ 102.2 | |
Reserve for general and professional liability | 436.2 | 436.2 | 442.9 | ||
Provision for workers' compensation | 15 | $ 13.9 | 41.4 | $ 42.7 | |
Reserve for workers' compensation risks | 173.9 | 173.9 | 174.6 | ||
Health insurance reserve | $ 16.9 | $ 16.9 | $ 17.5 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Recurring measures (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | $ 23,170 | $ 54,525 |
Restricted cash and equivalents | 104,930 | 4,113 |
Restricted investments in marketable securities | 137,824 | 126,116 |
Assets, Fair Value Disclosure, Total | 265,924 | 184,754 |
Level 1 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | 23,170 | 54,525 |
Restricted cash and equivalents | 104,930 | 4,113 |
Restricted investments in marketable securities | 137,824 | 126,116 |
Assets, Fair Value Disclosure, Total | $ 265,924 | $ 184,754 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Debt Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Principal balance outstanding, net | $ 1,204,025 | $ 1,077,299 |
Asset based lending facilities | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Principal balance outstanding, net | 403,110 | |
New term loan agreement | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Principal balance outstanding, net | 183,043 | 120,706 |
Real estate loans | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Principal balance outstanding, net | 313,730 | 281,039 |
HUD insured loans | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Principal balance outstanding, net | 182,656 | 263,827 |
Welltower Notes | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Principal balance outstanding, net | 80,794 | 68,122 |
Mortgages and other secured debt (recourse) | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Principal balance outstanding, net | 13,857 | 12,536 |
Mortgages and other secured debt (non-recourse) | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Principal balance outstanding, net | 26,835 | 27,978 |
Revolving Credit Facility | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Principal balance outstanding, net | 303,091 | |
Level 2 | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 1,203,206 | 1,064,240 |
Level 2 | Asset based lending facilities | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 403,110 | |
Level 2 | New term loan agreement | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 183,043 | 120,706 |
Level 2 | Real estate loans | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 313,730 | 281,039 |
Level 2 | HUD insured loans | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 181,837 | 250,768 |
Level 2 | Welltower Notes | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 80,794 | 68,122 |
Level 2 | Mortgages and other secured debt (recourse) | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 13,857 | 12,536 |
Level 2 | Mortgages and other secured debt (non-recourse) | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | $ 26,835 | 27,978 |
Level 2 | Revolving Credit Facility | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | $ 303,091 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Nonrecurring measures (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Non-recurring Fair Value Measures | |||
Property and equipment, Impairment Charges | $ 88,000 | ||
Fair Value, Measurements, Nonrecurring [Member] | |||
Non-recurring Fair Value Measures | |||
Property and equipment, net | 2,919,584 | $ 3,413,599 | |
Goodwill | 85,642 | 85,642 | |
Goodwill, Impairment Loss | $ 351,470 | ||
Intangible assets | 125,386 | $ 142,976 | |
Property and equipment, Impairment charges | 88,008 | 163,364 | |
Intangible assets, Impairment Loss | $ 2,061 | $ 8,576 |
Asset Impairment Charges (Detai
Asset Impairment Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Asset Impairment Charges | ||||
Reporting Unit, Name of Segment [Extensible List] | us-gaap:InpatientServicesMember | us-gaap:InpatientServicesMember | us-gaap:InpatientServicesMember | us-gaap:InpatientServicesMember |
Inpatient Services | ||||
Asset Impairment Charges | ||||
Impairment of Long-Lived Assets Held-for-use | $ 32.4 | $ 163.4 | $ 88 | $ 163.4 |
Management contracts | ||||
Asset Impairment Charges | ||||
Impairment charges | 7.3 | 7.3 | ||
Favorable Leases | ||||
Asset Impairment Charges | ||||
Impairment charges | $ 0.9 | $ 0 | $ 2.1 | $ 0 |
Assets Held for Sale (Details)
Assets Held for Sale (Details) $ in Thousands | Oct. 01, 2018 | Nov. 01, 2016item | Sep. 30, 2018USD ($)facility |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Number of facilities sold | item | 64 | ||
Number of facilities classified as held for sale | facility | 23 | ||
Assets held for sale. | |||
Assets and Liabilities of Disposal Group | |||
Prepaid expenses | $ 9,533 | ||
Property and equipment, net of accumulated depreciation of $27,832 | 99,718 | ||
Accumulated depreciation | 26,145 | ||
Total Assets | 109,251 | ||
Current installments of long-term debt | 2,123 | ||
Long-term debt | 86,137 | ||
Financing obligations | 19,670 | ||
Total Liabilities | $ 107,930 | ||
Nonstrategic Facilities And Investments | Disposed by sale | Welltower Master Lease | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Number of facilities under lease | facility | 1 | ||
Nonstrategic Facilities And Investments | Disposed by sale | Welltower Real Estate Loans | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Number of facilities sold | facility | 13 | ||
Nonstrategic Facilities And Investments | Disposed by sale | HUD insured loans | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Number of facilities sold | facility | 9 | ||
Texas | Skilled Nursing Facilities | Assets held for sale. | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Number of facilities sold | 16 | ||
Sales consideration amount | $ 120,000 | ||
Number of facilities classified as held for sale | facility | 23 | ||
Impairment charge recognized to reflect decrease in sale price of disposal group | $ 20,000 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Millions | May 01, 2016USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)item | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | Jun. 01, 2018USD ($)item |
Related Party Transaction | |||||||
Number of LLCs affiliated with Next Healthcare | item | 12 | ||||||
Disposed by sale | Hospice And Home Health Operations | |||||||
Related Party Transaction | |||||||
Cash proceeds | $ 72 | ||||||
Noncash consideration received in disposal | $ 12 | ||||||
Short-term Debt | $ 18.1 | $ 18.1 | |||||
Rehabilitation Services | |||||||
Related Party Transaction | |||||||
Net accounts receivable from related party | 30.1 | 30.1 | $ 32 | ||||
Gross accounts receivable from related party | 58.9 | 58.9 | |||||
Rehabilitation Services | |||||||
Related Party Transaction | |||||||
Net revenue from related party | 30.6 | $ 35.1 | 96.2 | $ 109.1 | |||
Reserves for uncollectible related party receivables | $ 55 | ||||||
FC PAC | Hospice And Diagnostic Services | |||||||
Related Party Transaction | |||||||
Amount of services in period | $ 3.4 | $ 3.2 | $ 10 | $ 8.9 | |||
Board of directors | 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% | ||||||
Next Healthcare | |||||||
Related Party Transaction | |||||||
Number of facilities under lease and purchase option | item | 12 | ||||||
Initial annualized lease rent paid | $ 13 | ||||||
Board of directors | Next Healthcare | |||||||
Related Party Transaction | |||||||
Ownership interest percentage | 2.50% |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | Nov. 01, 2018USD ($)facilityitem | Oct. 01, 2018USD ($)facility | Apr. 01, 2018USD ($)facility | Nov. 01, 2016item | Sep. 30, 2018facility |
Subsequent Event [Line Items] | |||||
Number of facilities sold | item | 64 | ||||
Divestiture | Skilled Nursing Facilities | |||||
Subsequent Event [Line Items] | |||||
Number of facilities divested or closed | 5 | 13 | |||
Annual revenues | $ | $ 28.5 | ||||
Pre-tax net income | $ | $ 2.9 | ||||
Texas | Disposed by sale | Skilled Nursing Facilities | |||||
Subsequent Event [Line Items] | |||||
Number of facilities presented as assets held for sale | 23 | ||||
Subsequent Events | Texas | Disposed by sale | Skilled Nursing Facilities | |||||
Subsequent Event [Line Items] | |||||
Number of facilities sold | 7 | 16 | |||
Annual revenues | $ | $ 184.5 | ||||
Pre-tax net income | $ | $ 3.5 | ||||
Subsequent Events | Idaho Montana And New Mexico | Divestiture | |||||
Subsequent Event [Line Items] | |||||
Annual revenues | $ | $ 30.1 | ||||
Pre-tax net income | $ | $ 2.9 | ||||
Subsequent Events | Idaho | Divestiture | Skilled Nursing Facilities | |||||
Subsequent Event [Line Items] | |||||
Number of facilities divested or closed | 2 | ||||
Subsequent Events | Montana | Divestiture | Skilled Nursing Facilities | |||||
Subsequent Event [Line Items] | |||||
Number of facilities divested or closed | 2 | ||||
Subsequent Events | New Mexico And Arizona | Skilled Nursing Facility And Assisted Or Senior Living Facility | |||||
Subsequent Event [Line Items] | |||||
Number of operations acquired | 9 | ||||
Number of beds in facilities | item | 1,000 | ||||
Annual net revenue from acquired operations | $ | $ 60 | ||||
Subsequent Events | New Mexico | Skilled Nursing Facility | |||||
Subsequent Event [Line Items] | |||||
Number of operations acquired | 8 | ||||
Subsequent Events | New Mexico | Divestiture | Assisted Senior Living Facilities | |||||
Subsequent Event [Line Items] | |||||
Number of facilities divested or closed | 1 | ||||
Subsequent Events | Arizona | Assisted Or Senior Living Facility | |||||
Subsequent Event [Line Items] | |||||
Number of operations acquired | 1 |