Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 15, 2019 | Jun. 30, 2018 | |
Document and Entity Information [Line Items] | |||
Entity Registrant Name | Genesis Healthcare, Inc. | ||
Entity Central Index Key | 0001351051 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 153.4 | ||
Class A Common Stock | |||
Document and Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 104,416,818 | ||
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 | 56,620,453 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 20,865 | $ 54,525 |
Restricted cash and equivalents | 73,762 | 4,113 |
Restricted investments in marketable securities | 35,631 | 33,015 |
Accounts receivable, net of allowances for doubtful accounts of $313,357 at December 31, 2017 | 622,717 | 724,138 |
Prepaid expenses | 82,747 | 74,368 |
Other current assets | 36,528 | 49,748 |
Assets held for sale | 3,375 | |
Total current assets | 875,625 | 939,907 |
Property and equipment, net of accumulated depreciation of $976,802 and $939,155 at December 31, 2018 and December 31, 2017, respectively | 2,887,554 | 3,413,599 |
Restricted cash and equivalents | 47,649 | |
Restricted investments in marketable securities | 100,522 | 93,101 |
Other long-term assets | 125,595 | 109,060 |
Deferred income taxes | 5,867 | 3,580 |
Identifiable intangible assets, net of accumulated amortization of $99,160 and $88,336 at December 31, 2018 and December 31, 2017, respectively | 119,082 | 142,976 |
Goodwill | 85,642 | 85,642 |
Assets held for sale | 16,087 | |
Total assets | 4,263,623 | 4,787,865 |
Current liabilities: | ||
Current installments of long-term debt | 122,531 | 26,962 |
Capital lease obligations | 2,171 | 2,511 |
Financing obligations | 2,001 | 1,878 |
Accounts payable | 234,786 | 285,637 |
Accrued expenses | 227,813 | 233,856 |
Accrued compensation | 172,726 | 167,368 |
Self-insurance reserves | 149,545 | 180,982 |
Current portion of liabilities held for sale | 639 | |
Total current liabilities | 912,212 | 899,194 |
Long-term liabilities: | ||
Long-term debt | 1,082,933 | 1,050,337 |
Capital lease obligations | 967,942 | 1,025,355 |
Financing obligations | 2,732,939 | 2,929,483 |
Deferred income taxes | 6,281 | 7,584 |
Self-insurance reserves | 453,993 | 436,560 |
Liabilities held for sale | 25,942 | |
Other long-term liabilities | 126,247 | 119,484 |
Commitments and contingencies | ||
Stockholders’ deficit: | ||
Additional paid-in-capital | 270,408 | 290,573 |
Accumulated deficit | (1,609,828) | (1,374,597) |
Accumulated other comprehensive loss | (262) | (362) |
Total stockholders’ deficit before noncontrolling interests | (1,339,520) | (1,084,227) |
Noncontrolling interests | (705,346) | (595,905) |
Total stockholders' deficit | (2,044,866) | (1,680,132) |
Total liabilities and stockholders’ deficit | 4,263,623 | 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 | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Allowance for doubtful accounts | $ 313,357 | |
Other assets: | ||
Accumulated depreciation on property and equipment | $ 976,802 | 939,155 |
Accumulated amortization on intangible assets | $ 99,160 | $ 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) | 101,235,935 | 97,100,738 |
Common stock, shares, outstanding (in shares) | 101,235,935 | 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 | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||
Net revenues | $ 4,976,650 | $ 5,373,740 |
Salaries, wages and benefits | 2,786,908 | 3,036,868 |
Other operating expenses | 1,479,880 | 1,583,114 |
General and administrative costs | 149,182 | 167,718 |
Lease expense | 129,859 | 147,525 |
Depreciation and amortization expense | 220,896 | 255,786 |
Interest expense | 463,738 | 499,382 |
Loss (gain) on early extinguishment of debt | 391 | (6,566) |
Investment income | (6,832) | (5,328) |
Other (income) loss | (12,920) | 8,473 |
Transaction costs | 31,953 | 14,325 |
Customer receivership and other related charges | 90,864 | |
Long-lived asset impairments | 104,997 | 191,375 |
Goodwill and identifiable intangible asset impairments | 3,538 | 360,046 |
Equity in net income of unconsolidated affiliates | (100) | (243) |
Loss before income tax benefit | (374,840) | (969,599) |
Income tax benefit | (2,423) | (10,427) |
Loss from continuing operations | (372,417) | (959,172) |
Loss from discontinued operations, net of taxes | (32) | |
Net loss | (372,417) | (959,204) |
Less net loss attributable to noncontrolling interests | 137,186 | 380,222 |
Net loss attributable to Genesis Healthcare, Inc. | $ (235,231) | $ (578,982) |
Basic and Diluted: | ||
Weighted-average shares outstanding for loss from continuing operations per share | 101,007 | 94,217 |
Net loss per common share: | ||
Loss from continuing operations attributable to Genesis Healthcare, Inc. | $ (2.33) | $ (6.15) |
Net loss attributable to Genesis Healthcare, Inc. | $ (2.33) | $ (6.15) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||
Net loss | $ (372,417) | $ (959,204) |
Net unrealized loss on marketable securities, net of tax | (48) | (209) |
Comprehensive loss | (372,465) | (959,413) |
Less: comprehensive loss attributable to noncontrolling interests | 137,334 | 380,290 |
Comprehensive loss attributable to Genesis Healthcare, Inc. | $ (235,131) | $ (579,123) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) shares in Thousands, $ in Thousands | Common StockClass A Common Stock | Common StockClass B Common Stock | Common StockClass C Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive income (loss) | Stockholders' deficit | Noncontrolling interests | Total |
Balance, beginning of period at Dec. 31, 2016 | $ 75 | $ 16 | $ 64 | $ 305,358 | $ (795,615) | $ (221) | $ (490,323) | $ (239,865) | $ (730,188) |
Balance, beginning of period (in shares) at Dec. 31, 2016 | 75,187 | 15,495 | 63,849 | ||||||
Comprehensive (loss) income: | |||||||||
Net loss | (578,982) | (578,982) | (380,222) | (959,204) | |||||
Net unrealized gain (loss) on marketable securities, net of tax | (141) | (141) | (68) | (209) | |||||
Share-based compensation | 9,621 | 9,621 | 9,621 | ||||||
Issuance of common stock | $ 2 | (30) | (28) | (28) | |||||
Issuance of common stock, shares | 1,874 | ||||||||
Conversion of common stock among classes | $ 17 | $ (15) | $ (3) | (27,163) | (27,164) | 27,164 | |||
Conversion of common stock among classes (in shares) | 17,040 | (14,751) | (2,288) | ||||||
Distributions to noncontrolling interests | (2,914) | (2,914) | |||||||
Conversion of convertible debt | $ 3 | 2,787 | 2,790 | 2,790 | |||||
Conversion of convertible debt (in shares) | 3,000 | ||||||||
Balance, end of period at Dec. 31, 2017 | $ 97 | $ 1 | $ 61 | 290,573 | (1,374,597) | (362) | (1,084,227) | (595,905) | (1,680,132) |
Balance, end of period (in shares) at Dec. 31, 2017 | 97,101 | 744 | 61,561 | ||||||
Comprehensive (loss) income: | |||||||||
Net loss | (235,231) | (235,231) | (137,186) | (372,417) | |||||
Net unrealized gain (loss) on marketable securities, net of tax | 100 | 100 | (148) | (48) | |||||
Share-based compensation | 8,820 | 8,820 | 8,820 | ||||||
Issuance of common stock | $ 2 | (2) | |||||||
Issuance of common stock, shares | 2,275 | ||||||||
Conversion of common stock among classes | $ 2 | $ (1) | (29,855) | (29,854) | 29,854 | ||||
Conversion of common stock among classes (in shares) | 1,860 | (1,860) | |||||||
Distributions to noncontrolling interests | (64) | (64) | (1,961) | (2,025) | |||||
Issuance of stock warrants | 936 | 936 | 936 | ||||||
Balance, end of period at Dec. 31, 2018 | $ 101 | $ 1 | $ 60 | $ 270,408 | $ (1,609,828) | $ (262) | $ (1,339,520) | $ (705,346) | $ (2,044,866) |
Balance, end of period (in shares) at Dec. 31, 2018 | 101,236 | 744 | 59,701 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities | ||
Net loss | $ (372,417) | $ (959,204) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Non-cash interest and leasing arrangements, net | 72,193 | 77,974 |
Other non-cash (gains) charges, net | (12,920) | 8,473 |
Share based compensation | 8,820 | 9,621 |
Depreciation and amortization expense | 220,896 | 255,786 |
Provision for losses on accounts receivable | 2,554 | 96,409 |
Equity in net income of unconsolidated affiliates | (100) | (243) |
Benefit for deferred taxes | (3,475) | (12,128) |
Customer receivership and other related charges | 90,864 | |
Long-lived asset impairments | 104,997 | 191,375 |
Goodwill and identifiable intangible asset impairments | 3,538 | 360,046 |
Gain on early extinguishment of debt | (94) | (6,566) |
Changes in assets and liabilities: | ||
Accounts receivable | 66,508 | (86,256) |
Accounts payable and other accrued expenses and other | (71,916) | 94,304 |
Net cash provided by operating activities | 18,584 | 120,455 |
Cash flows from investing activities: | ||
Capital expenditures | (51,152) | (64,106) |
Purchases of marketable securities | (79,650) | (48,595) |
Proceeds on maturity or sale of marketable securities | 69,180 | 69,273 |
Sales of assets | 74,375 | 90,583 |
Other, net | (877) | 397 |
Net cash provided by investing activities | 11,876 | 47,552 |
Cash flows from financing activities: | ||
Borrowings under revolving credit facilities | 4,591,439 | 599,000 |
Repayments under revolving credit facilities | (4,548,815) | (678,650) |
Proceeds from issuance of long-term debt | 574,171 | 37,810 |
Proceeds from tenant improvement draws under lease arrangements | 6,084 | |
Repayment of long-term debt | (544,077) | (128,307) |
Debt issuance costs | (17,030) | (5,852) |
Debt settlement costs | (485) | |
Distributions to noncontrolling interests and stockholders | (2,025) | (2,914) |
Net cash provided by (used in) financing activities | 53,178 | (172,829) |
Net increase (decrease) in cash, cash equivalents and restricted cash and equivalents | 83,638 | (4,822) |
Cash, cash equivalents and restricted cash and equivalents: | ||
Beginning of period | 58,638 | 63,460 |
End of period | 142,276 | 58,638 |
Supplemental cash flow information: | ||
Interest paid | 393,632 | 435,510 |
Net taxes paid (refunded) | 4,427 | (861) |
Non-cash investing and financing activities: | ||
Capital lease obligations, net (write-down) gross-up due to lease activity | (69,255) | |
Capital lease obligations, net (write-down) gross-up due to lease activity | 5,350 | |
Assets subject to capital lease obligations, net write-down (gross-up) due to lease activity | 50,321 | (5,350) |
Financing obligations, net (write-down) gross-up due to lease activity | 24,046 | |
Financing obligations, net (write-down) gross-up due to lease activity | (168,993) | |
Assets subject to financing obligations, net write-down (gross-up) due to lease activity | $ 131,048 | $ (24,046) |
General Information
General Information | 12 Months Ended |
Dec. 31, 2018 | |
General Information | |
General Information | (1) 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 December 31, 2018, the Company provides inpatient services through 425 skilled nursing, assisted/senior living and behavioral health centers located in 29 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 control 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 VIEs were not material at December 31, 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 on the consolidated statements of operations. See Note 5 – “ 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 (March 18, 2019). 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 March 18, 2020. Based upon such considerations, management determined that there are no known or knowable conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern for 12 months following the date of issuance of these financial statements (March 18, 2019). The Company’s results of operations continue to be 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, persists. In response to these issues, the Company entered into a number of agreements, amendments and new financing facilities (the Restructuring Transactions), exited the operations of 55 non-strategic centers and restructured/terminated certain leases during the year ended December 31, 2018. See Note 4 – “ Significant Transactions and Events” for further detail. The Company expects to continue to pursue cost mitigation and other strategies in 2019 in response to the operating environment and liquidity requirements. During 2018 and 2019, the Company also amended, or obtained waivers related to, the financial covenants of all of its material debt and lease agreements to account for these ongoing changes in its capital structure and business conditions. Although the Company is and projects to be in compliance with all of its material debt and lease covenants through March 31, 2020 , 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 the covenants. 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 apply, the default could have a more significant impact on the Company’s financial position. The Company is currently considering various options related to the long-term financing of the Company’s operations including extending or refi nancing the Term Loan Agreement which is currently scheduled to mature on July 29, 2020. The ABL Credit Facilities have a stated maturity of March 6, 2023. However, the ABL Credit Facilities also include a springing maturity clause that would accelerate its maturity to 90 days prior to the maturity of the Term Loan Agreements and other debt instruments. If the Term Loan Agreement is not extended or refinanced prior to April 29, 2020, the ABL Credit Facilities would mature on such date and all amounts outstanding thereunder will become due and payable. See Note 11 – “ Long-Term Debt – Asset Based Lending Facilities. ” |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | (2) Estimates and Assumptions The consolidated financial statements have been prepared in conformity with U.S. GAAP, which requires management to consolidate company financial information and make informed estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates in the Company’s consolidated financial statements relate to valuation of accounts receivable, self-insured liabilities, income taxes, long-lived assets and goodwill, and other contingencies. Actual results could differ from those estimates. Revenue Recognition The Company adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (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 5 – “ Net Revenues and Accounts Receivable. ” Accounts Receivable The Company’s accounts receivable are primarily comprised of amounts due from Medicare, Medicaid, private insurance, self-pay residents, other third-party payors and long-term care providers that utilize its rehabilitation therapy and other services. The Company evaluates the valuation of accounts receivable based on analysis of historical collection trends, as well as its understanding of the nature and collectibility of accounts based on their age and other factors. Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments with original maturities of three months or less when purchased and therefore, approximate fair value. The Company’s available cash is held in accounts at commercial banking institutions. The Company currently has bank deposits with commercial banking institutions that exceed Federal Deposit Insurance Corporation insurance limits. Restricted Cash and Equivalents Restricted cash and equivalents includes cash and money market funds held by the Company’s wholly owned captive insurance subsidiary, which are substantially restricted to securing outstanding claims losses. Further, restricted cash and equivalents includes cash proceeds received under the ABL Credit Facilities that are pledged to cash collateralize letters of credit previously issued under the retired revolving credit facilities, as well as cash account balances subject to deposit account control agreements that were sprung under the ABL Credit Facilities resulting in the majority of the Company’s cash accounts reclassified as restricted. See Note 11 – “ Long-Term Debt – Asset Based Lending Facilities.” The restricted cash and equivalents balances at December 31, 2018 and 2017 were $121.4 million and $4.1 million, respectively. Restricted Investments in Marketable Securities Restricted investments in marketable securities primarily consist of fixed interest rate securities that are considered to be available-for-sale and accordingly are reported at fair value with unrealized gains and losses, net of related tax effects, included within accumulated other comprehensive loss, a separate component of stockholders’ deficit. Fair values for fixed interest rate securities are based on quoted market prices. A decline in the market value of any security below cost that is deemed other-than-temporary is charged to income, resulting in the establishment of a new cost basis for the security. Realized gains and losses for securities classified as available-for-sale are derived using the specific identification method for determining the cost of securities sold. The restricted investments in marketable securities balances at December 31, 2018 and 2017 were $136.2 million and $126.1 million, respectively. Property and Equipment Property and equipment are carried at cost less accumulated depreciation. Depreciation expense is calculated using the straight-line method over the estimated useful lives of the depreciable assets, which generally range from 20-35 years for buildings, building improvements and land improvements, and 3-15 years for equipment, furniture and fixtures. Depreciation expense on leasehold improvements and assets held under capital leases is calculated using the straight-line method over the lesser of the lease term or the estimated useful life of the asset. Expenditures for maintenance and repairs necessary to maintain property and equipment in efficient operating condition are expensed as incurred. Costs of additions and improvements are capitalized. Total depreciation expense for the years ended December 31, 2018 and 2017 was $210.0 million and $238.2 million, respectively. Impairment of Long-Lived Assets The Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount of an asset to the future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized to the extent the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or the fair value, less costs to sell. See Note 20 – “ Asset Impairment Charges .” Goodwill and Identifiable Intangible Assets Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. The Company tests goodwill on an annual basis and between annual tests if events occur or circumstances exist that would reduce the fair value of a reporting unit below its carrying amount. The Company performs its annual goodwill impairment assessment for its reporting units as of September 30 of each year. The Company first assesses qualitative factors to determine whether it is necessary to perform quantitative goodwill impairment testing. If determined necessary, the Company applies the quantitative impairment test to identify and measure the amount of impairment, if any. See Note 10 – “ Goodwill and Identifiable Intangible Assets ” and Note 20 – “ Asset Impairment Charges .” Definite-lived intangible assets consist of management contracts, customer relationships and favorable leases. These assets are amortized in accordance with the authoritative guidance for intangible assets using the straight-line method over their estimated useful lives. These assets are tested for impairment consistent with the Company’s long-lived assets. Indefinite-lived intangible assets consist of trade names. The Company tests indefinite-lived intangible assets for impairment on an annual basis or more frequently if events occur or circumstances exist that would indicate that the carrying amount of the intangible asset may not be recoverable. See Note 10 – “ Goodwill and Identifiable Intangible Assets ” and Note 20 – “ Asset Impairment Charges .” Self-Insurance Reserves The Company provides for self-insurance reserves for both general and professional liability and workers’ compensation claims based on estimates of the ultimate costs for both reported claims and claims incurred but not reported. Estimated losses from asserted and incurred but not reported claims are accrued based on the Company’s estimates of the ultimate costs of the claims, which include costs associated with litigating or settling claims, and the relationship of past reported incidents to eventual claims payments. All relevant information, including the Company’s own historical experience, the nature and extent of existing asserted claims and reported incidents, and independent actuarial analyses of this information is used in estimating the expected amount of claims. The reserves for loss for workers’ compensation risks are discounted based on actuarial estimates of claim payment patterns whereas the reserves for general and professional liability are recorded on an undiscounted basis. The Company also considers amounts that may be recovered from excess insurance carriers in estimating the ultimate net liability for such risks. See Note 22 – “ Commitments and Contingencies – Loss Reserves For Certain Self-Insured Programs – General and Professional Liability and Workers’ Compensation .” Income Taxes The Company’s effective tax rate is based on pretax income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which it operates. The Company accounts for income taxes in accordance with applicable guidance on accounting for income taxes, which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between book and tax bases on recorded assets and liabilities. Accounting guidance also requires that deferred tax assets be reduced by a valuation allowance, when it is more likely than not that a tax benefit will not be realized. The recognition and measurement of a tax position is based on management’s best judgment given the facts, circumstances and information available at the reporting date. The Company evaluates tax positions to determine whether the benefits of tax positions are more likely than not of being sustained upon audit based on the technical merits of the tax position. For tax positions that are more likely than not of being sustained upon audit, the Company recognizes the largest amount of the benefit that is greater than 50% likely of being realized upon ultimate settlement in the financial statements. For tax positions that are not more likely than not of being sustained upon audit, the Company does not recognize any portion of the benefit in the financial statements. If the more likely than not threshold is not met in the period for which a tax position is taken, the Company may subsequently recognize the benefit of that tax position if the tax matter is effectively settled, the statute of limitations expires, or if the more likely than not threshold is met in a subsequent period. The Company evaluates, on a quarterly basis, its ability to realize deferred tax assets by assessing its valuation allowance and by adjusting the amount of such allowance, if necessary. The factors used to assess the likelihood of realization are its forecast of pre-tax earnings, its forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. To the extent the Company prevails in matters for which reserves have been established, or are required to pay amounts in excess of its reserves, its effective tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement would require use of cash and result in an increase in the effective tax rate in the year of resolution. A favorable tax settlement would be recognized as a reduction in the Company’s effective tax rate in the year of resolution. The Company records accrued interest and penalties associated with uncertain tax positions as income tax expense in the consolidated statement of operations. Leases Leasing transactions are a material part of the Company’s business. The following discussion summarizes various aspects of the Company’s accounting for leasing transactions and the related balances. Capital Leases Lease arrangements are capitalized when such leases convey substantially all the risks and benefits incidental to ownership. Capital leases are amortized over either the lease term or the life of the related assets, depending upon available purchase options and lease renewal features. Amortization of capital lease obligations is included in the consolidated statements of operations within interest expense. Amortization of capital lease assets is included in the consolidated statements of operations within depreciation and amortization expense. See Note 12 – “ Lease and Lease Commitments .” Operating Leases For operating leases, minimum lease payments, including minimum scheduled rent increases, are recognized as lease expense on a straight-line basis over the applicable lease terms, including any periods during which the Company has use of the property but is not charged rent by a landlord. A majority of the Company’s leases, provide for rent escalations and renewal options. When the Company purchases businesses that have lease agreements accounted for as operating leases, it recognizes the fair value of the lease arrangements as either favorable or unfavorable and records these amounts as other identifiable intangible assets or other long-term liabilities, respectively. Favorable and unfavorable leases are amortized to lease expense on a straight-line basis over the remaining term of the leases. See Note 12 – “ Lease and Lease Commitments .” Sale/Leaseback Financing Obligation Prior to recognition as a sale, or profit/loss thereon, sale/leaseback transactions are evaluated to determine if their terms transfer all of the risks and rewards of ownership as demonstrated by the absence of any other continuing involvement by the seller-lessee. A sale/leaseback transaction that does not qualify for sale/leaseback accounting because of any form of continuing involvement by the seller-lessee is accounted for as a financing transaction. Under the financing method: (1) the assets and accumulated depreciation remain on the consolidated balance sheet and continue to be depreciated over the remaining useful lives; (2) no gain is recognized; and (3) proceeds received by the Company from these transactions are recorded as a financing obligation. See Note 13 – “ Financing Obligations .” Loss Per Share Loss per share is based upon the weighted average number of common shares outstanding during the respective periods. The Company follows the provisions of the authoritative guidance for determining whether instruments granted in share-based payment transactions are participating securities for purposes of calculating loss per common share. See Note 6 – “ Loss Per Share .” Stock-Based Compensation The Company recognizes compensation expense related to stock-based compensation awards in accordance with the related authoritative guidance. See Note 15 – “ Stock-Based Compensation .” Recently Adopted Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers and all related amendments, 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 5 – “ 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 adoption of ASU 2017-01 did not have a material impact on the Company’s 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 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 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 Act. Under the provisions of ASU 2018-05, the measurement period to determine reasonable tax positions regarding the provisions of the Tax Act cannot exceed 12 months from the enactment period of the legislation. The Tax Act was enacted on December 22, 2017. Management applied this guidance in the calculation of the Company's year ended December 31, 2017 tax provision. In the calculation of the Company's year ended December 31, 2018 tax provision, management calculated final determinations for the tax positions under the Tax Act that it previously made reasonable estimates within its year ended December 31, 2017 tax provision. Recently Issued Accounting Pronouncements In February 2016, the FASB established ASC Topic 842, Leases (Topic 842), by issuing ASU No. 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 Company adopted the new standard on January 1, 2019. The Company elected the option to apply the transition requirements in Topic 842 at the effective date of January 1, 2019 with the effects of initially applying Topic 842 recognized as a cumulative-effect adjustment to accumulated deficit in the period of adoption. Consequently, financial information has not been updated and the disclosures required under the new standard have not been provided for dates and periods before January 1, 2019. The new standard provides a number of optional practical expedients in transition. The Company has elected 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 new standard will have a material effect on the Company’s consolidated financial statements. The most significant effects of adoption 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 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. Upon adoption, the Company expects to: · Recognize additional operating lease liabilities of approximately $0.6 billion based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. The Company expects to recognize corresponding ROU assets of approximately $0.5 billion based on the operating lease liabilities, adjusted for existing straight-line lease liabilities, existing assets and liabilities related to favorable and unfavorable terms of operating leases previously recognized in respect of business combinations, and the impairment of the ROU assets. The resulting net impact of approximately $0.1 billion associated with this change in accounting will be recognized as an increase to opening accumulated deficit as of January 1, 2019. · Derecognize existing financing obligations of $2.7 billion and existing property and equipment of $1.7 billion. The Company will recognize new operating lease liabilities and corresponding ROU assets of approximately $1.9 billion on its balance sheet for the associated leases. The resulting net impact of approximately $1.0 billion associated with this change in accounting will be recognized as a reduction to opening accumulated deficit as of January 1, 2019. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company will 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 Act on items within accumulated other comprehensive income (loss) to accumulated deficit. 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 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 Act is recognized. The adoption of ASU 2018-02 will not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement , which simplifies the fair value measurement disclosure requirements. The standard is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the effect that the standard will have on its consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments , which is intended to improve financial reporting by requiring earlier recognition of credit losses on certain financial assets, such as available-for-sale debt securities. The standard replaces the current incurred loss impairment model that recognizes losses when a probable threshold is met with a requirement to recognize lifetime expected credit losses immediately when a financial asset is originated or purchased. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those annual periods, with early adoption permitted for fiscal years beginning after December 15, 2018. The Company is currently evaluating the effect that the standard will have on its consolidated financial statements and related disclosures. |
Certain Significant Risks and U
Certain Significant Risks and Uncertainties | 12 Months Ended |
Dec. 31, 2018 | |
Certain Significant Risks and Uncertainties | |
Certain Significant Risks and Uncertainties | (3) Revenue Sources The Company receives revenues from Medicare, Medicaid, private insurance, self-pay residents, other third-party payors and long-term care facilities that utilize its rehabilitation therapy and other services. The Company’s inpatient services segment derives approximately 78% 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 years ended December 31, 2018 and 2017. Year ended December 31, 2018 2017 Medicare 21 % 23 % Medicaid 57 % 56 % Insurance 12 % 12 % Private 8 % 8 % Other 2 % 1 % Total 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 an 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. The Company’s business is subject to a number of other known and unknown risks and uncertainties, which are discussed in Item 1A. “ Risk Factors .” 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 therapy services business where it has over 180 distinct customers, many being chain operators with more than one location. The four largest customers of the Company’s rehabilitation services business comprise $55.8 million, approximately 52%, of the net outstanding contract receivables in the rehabilitation therapy services business at December 31, 2018. An adverse event impacting the solvency of one or more of these large customers resulting in their insolvency or other economic distress would have a material impact on the Company. In December 2017, the Company recorded a $55.0 million non-cash impairment charge to customer receivership and other related charges associated with a related party customer of the Company. This charge reduced the net receivable of the customer to $32.0 million. The customer comprises $32.3 million, approximately 30%, of the net outstanding contract receivables in the rehabilitation services business at December 31, 2018. In the year ended December 31, 2018, gross accounts receivable of $58.9 million were converted to a note receivable. The $55.0 million reserve recorded in 2017 was posted against the note receivable. See Note 17 – “Related Party Transactions.” In July 2017, a significant customer of the Company’s rehabilitation therapy services business filed for receivership. This customer operated 65 nursing facilities in six states at the time of the filing. The Company recorded a non-cash impairment charge to customer receivership and other related charges of $35.6 million in the year ended December 31, 2017. In the year ended December 31, 2017, the Company recognized revenues of $32.2 million and income from continuing operations of $4.6 million, respectively, for the customer in receivership. In September 2017, another customer operating only a single skilled nursing facility filed for receivership resulting in a non-cash charge to customer receivership and other related charges of $0.3 million in the year ended December 31, 2017. 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 financial 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 financial 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 | 12 Months Ended |
Dec. 31, 2018 | |
Significant Transactions And Events | |
Significant Transactions and Events | (4) Restructuring Transactions Overview During the quarter ended March 31, 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 reduced the Company’s annual cash fixed charges by approximately $62.0 million beginning in 2018 and also 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 11 – “ 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 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 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. As of December 31, 2018, the conditions described above have not been satisfied. 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, which had not occurred as of December 31, 2018. 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. Divestiture of Non-Strategic Facilities 2017 Divestitures For the year ended December 31, 2017, the Company divested the operations of 30 skilled nursing facilities and the real and personal property of five skilled nursing facilities leased to a third party operator. These divestitures resulted in net losses of $16.2 million, which are included in other (income) loss on the consolidated statements of operations. See Note 19 – “ Other (Income) Loss .” Below is a summary of each divestiture event. On February 1, 2017, the Company divested two skilled nursing facilities located in Georgia at the expiration of their respective lease terms. The two skilled nursing facilities had annual revenue of $10.6 million and pre-tax net loss of $0.4 million. The Company recognized a loss of $0.7 million. On March 14, 2017, the Company completed the divestiture of four skilled nursing facilities located in Massachusetts that were subject to a master lease agreement with Omega. These facilities, along with two other facilities that were divested previously and subleased to a third-party operator, were sold and terminated from the master lease resulting in an annual rent credit of $1.2 million. The master lease termination resulted in a capital lease net asset and obligation write-down of $14.9 million. The four skilled nursing facilities had annual revenue of $26.7 million and pre-tax net income of $1.2 million. The Company recognized a loss of $1.4 million. On April 1, 2017, the Company divested a skilled nursing facility located in Tennessee. The skilled nursing facility was subject to a master lease agreement with Sabra Health Care REIT, Inc. (Sabra) and had annual revenue of $7.4 million and pre-tax net income of $0.5 million. The Company recognized a loss of $0.8 million. On April 1, 2017, the Company divested 18 skilled nursing facilities (16 owned and two leased) located in Kansas, Missouri, Nebraska and Iowa. The 18 skilled nursing facilities had annual revenue of $110.1 million, pre-tax net loss of $10.7 million and total assets of $91.6 million. Sale proceeds of approximately $80 million, net of transaction costs, were used principally to repay the indebtedness of the skilled nursing facilities. The Company recognized a loss of $6.5 million. The 16 owned skilled nursing facilities qualified and were presented as assets held for sale at December 31, 2016. One of the leased skilled nursing facilities was subleased to a new operator resulting in a loss associated with a cease to use asset of $4.1 million. On June 1, 2017, the Company divested one skilled nursing facility located in North Carolina. The skilled nursing facility was subject to an expiring lease agreement and had annual revenue of $6.4 million and pre-tax net loss of $1.0 million. The Company recognized a loss of $0.5 million. On July 10, 2017, the Company divested one skilled nursing facility located in Colorado. The skilled nursing facility was subject to a master lease agreement with Sabra and had annual revenue of $5.7 million and pre-tax net loss of $2.2 million. The Company recognized a loss of $0.5 million. On September 28, 2017, the Company closed one skilled nursing facility located in California. The skilled nursing facility was subject to a master lease agreement with Sabra and had annual revenue of $6.9 million and pre-tax net loss of $1.6 million. The Company recognized a loss of $0.1 million. On October 1, 2017, the Company divested two skilled nursing facilities located in Georgia. The two skilled nursing facilities were subject to a master lease agreement with Sabra and had annual revenue of $15.5 million and pre-tax net loss of $3.0 million. The Company recognized a loss of $1.8 million. On December 22, 2017, the Company completed the divestiture of five skilled nursing facilities located in California. The Company owned the real and personal property of these five skilled nursing facilities, but leased the skilled nursing facilities to a third party operator. These five skilled facilities had annual rental income of $4.0 million and pre-tax net income of $2.7 million. The Company recognized a gain of $0.2 million. 2018 Divestitures For the year ended December 31, 2018, the Company divested the operations of 54 skilled nursing facilities and one assisted/senior living facility. These divestitures resulted in net gains of $34.8 million, which are included in other (income) loss on the consolidated statements of operations. See Note 19 – “ Other (Income) Loss .” Below is a summary of each divestiture event. On February 28, 2018, the Company closed one leased skilled nursing facility located in Massachusetts. The facility remains subject to a master lease with Welltower until the facility is sold. The facility generated annual revenues of $9.0 million and pre-tax net loss of $2.7 million. The closure resulted in a loss of $0.3 million. 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. 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 gain on the write off of certain lease liabilities of $2.1 million offset by a loss on exit costs of $1.5 million on the six skilled nursing facilities. On June 1, 2018, the Company divested one leased skilled nursing facility located in California upon the lease’s expiration. The facility generated annual revenues of $8.0 million and pre-tax net loss of $1.6 million. The divestiture resulted in a loss of $0.9 million. 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, respectively. 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 $21.3 million was offset by $6.9 million of exit costs. The Company 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. On July 1, 2018, the Company divested one behavioral outpatient clinic located in California upon the lease’s expiration. The clinic generated annual revenues of $4.5 million and pre-tax net loss of $0.5 million. The divestiture resulted in a loss of $0.2 million. 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. 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 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 $0.1 million. On October 1, 2018, the Company sold 15 owned and one leased skilled nursing facilities in Texas. Sale proceeds of approximately $89.4 million, net of transaction costs, were used principally to repay the indebtedness of the skilled nursing facilities. The Company recognized a gain of $3.4 million on the sale of real property and derecognition of financing lease assets and obligations offset by a loss of $3.0 million for exit costs. Debt premiums and issuance costs of $9.4 million associated with underlying HUD loans were written off as a gain on early extinguishment of debt. On November 1, 2018, the Company divested the operations of the remaining seven skilled nursing facilities in Texas. The Company remains the owner of the corresponding real property as of December 31, 2018, which is classified as assets held for sale in the consolidated balance sheets. See Note 21 – “ Assets Held for Sale .” The Company recognized a loss of $1.6 million on the exit of operations. On November 1, 2018, the Company divested four leased skilled nursing facilities located in Idaho and Montana that had been owned and leased to the Company by Sabra. The facilities generated annual revenues of $28.7 million and pre-tax net income of $3.1 million. The Company recognized a gain on the write off of certain lease liabilities of $0.9 million offset by a loss on exit costs of $1.1 million. On November 1, 2018, the Company divested one owned assisted living facility located in Nevada for a sales price of $2.2 million. Net proceeds of $1.9 million were used to pay down indebtedness. The facility generated annual revenues of $1.3 million and pre-tax net loss of $0.2 million. The sale resulted in no material gain or loss. On December 1, 2018, the Company divested one leased skilled nursing facility located in Georgia receiving an annual rent credit of $0.3 million. The facility generated annual revenues of $6.8 million and pre-tax net income of $0.2 million. The Company recognized a loss of $0.5 million. At December 31, 2018, the Company recorded a loss of $1.9 million for exit costs associated with the pending closure of certain clinics associated with the Company’s rehabilitation services business. 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. Four of the facilities have been classified as capital leases resulting in a capital lease asset and obligation gross up of $14.6 million. The remaining five facilities will be classified as operating leases. The Company expects no material impact to pre-tax net income in 2019. Lease Amendments and Terminations Gains, losses and termination charges associated with master lease terminations and amendments are recorded as non-recurring charges. These amendments and terminations resulted in net losses of $21.9 million and net gains of $7.7 million for the years ended December 31, 2018 and 2017, respectively. These gains and losses are included in other (income) loss on the consolidated statements of operations. Omega Amendment On December 22, 2017, the Company amended its master lease agreement with Omega. The Company received $10.0 million, which has been recorded as a capital lease obligation and is to be repaid over the term of the master lease at an initial annual rate of 9%. In addition, the master lease term was extended four years and the Company issued Omega a stock warrant to purchase 900,000 shares of Company stock at an exercise price of $1.00 per share, exercisable beginning August 1, 2018 and ending December 31, 2022. The master lease amendment resulted in a capital lease asset and obligation gross up of $20.3 million. Sabra Amendments and Terminations The Company entered into a definitive agreement with Sabra resulting in permanent and unconditional annual cash rent savings of $19 million effective January 1, 2018. Sabra has pursued and the Company has supported Sabra’s previously announced sale of the Company’s leased assets. At the closing of such sales, the Company has entered into lease agreements with new landlords for a majority of the assets currently leased with Sabra. Since December 22, 2017, Sabra has completed the sale of 54 facilities to third party landlords in which the Company has entered into new lease agreements. Those transactions are summarized below. On December 22, 2017, Sabra completed the sale of 20 of the Company’s leased assets in Kentucky, Ohio and Indiana. As a result of the sale, the Company received from Sabra an annual rent credit of $9.3 million for the remainder of the lease term. The Company continues to operate these facilities with a new landlord. The new lease has a ten-year initial term, one five-year renewal option and initial annual rent of $9.3 million. As a result of the sale, the Company recognized accelerated depreciation expense of $9.5 million on the property and equipment sold and a gain on the write off of certain lease liabilities of $7.7 million. On June 1, 2018, Sabra completed the sale and lease termination of 12 skilled nursing facilities located in Florida and 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 Capital (Next). See Note 17 – “ 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 December 12, 2018, Sabra completed the sale and lease termination of four skilled nursing facilities located in New Mexico, Colorado and California. As a result of the sale, the Company will receive an annual rent credit of $3.4 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 9.5 year initial term, one five-year renewal option and initial annual rent of $3.4 million As a result of the sale, the Company recognized accelerated depreciation expense of $4.6 million on the property and equipment sold and a gain on the write off of certain lease liabilities of $0.9 million. On December 21, 2018, Sabra completed the sale and lease termination of nine skilled nursing facilities located in Connecticut. As a result of the sale, the Company will receive an annual rent credit of $3.3 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 $3.3 million As a result of the sale, the Company recognized accelerated depreciation expense of $2.8 million on the property and equipment sold and a gain on the write off of certain lease liabilities of $5.3 million. As a result of the amendments and lease terminations noted above, the Company recorded a lease termination charge of $34.1 million in the year ended December 31, 2018, with an offsetting obligation recorded in other long-term liabilities. The charge represents the discounted residual rents the Company will continue to pay Sabra on the skilled nursing facilities that have been terminated due to either divestiture or sale to a new landlord. On an undiscounted basis, the Company is obligated to pay Sabra approximately $41.0 million as of December 31, 2018. This obligation will be repaid over a period of approximately 4 years ending in 2023. Other Amendments In early April 2018, the Company negotiated the extensions of four separate lease agreements resulting in the derecognition of certain lease assets totaling $1.9 million. The cease to use asset associated with a leased facility divestiture initially recorded at April 1, 2017, disclosed above, was further adjusted in the year ended December 31, 2018 to reflect changes in the sublease assumption resulting in an additional $2.0 million in losses recorded. |
Net Revenues and Accounts Recei
Net Revenues and Accounts Receivable | 12 Months Ended |
Dec. 31, 2018 | |
Net Revenues and Accounts Receivable | |
Net Revenues and Accounts Receivable | (5) 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 payors (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 year ended December 31, 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 year ended December 31, 2018, the Company recorded approximately $95.8 million 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 or loss 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 December 31, 2018, the Company’s accounts receivable balance includes $168.6 million that was classified as allowance for doubtful accounts at December 31, 2017. The Company has reclassified the provision for losses on accounts receivable of $96.4 million for the year ended December 31, 2017 to other operating expenses in the consolidated statements of operations. This reclassification 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 year ended December 31, 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 7 – “ Segment Information .” The composition of net revenues by payor type and operating segment for the year ended December 31, 2018 and 2017 are as follows (in thousands): Year ended December 31, 2018 Rehabilitation Inpatient Therapy Other Services Services Services Total Medicare $ 913,615 $ 89,514 $ — $ 1,003,129 Medicaid 2,461,228 2,096 — 2,463,324 Insurance 517,512 23,071 — 540,583 Private 339,680 438 — 340,118 Third party providers — 415,541 83,952 499,493 Other 64,838 17,254 47,911 130,003 Total net revenues $ 4,296,873 $ 547,914 . $ 131,863 $ 4,976,650 Year ended December 31, 2017 (4) Rehabilitation Inpatient Therapy Other Services Services Services Total Medicare $ 1,042,460 $ 94,010 $ — $ 1,136,470 Medicaid 2,557,595 1,797 — 2,559,392 Insurance 554,606 24,685 — 579,291 Private 386,518 715 — 387,233 Third party providers — 466,260 93,438 559,698 Other 85,123 16,139 50,394 151,656 Total net revenues $ 4,626,302 $ 603,606 $ 143,832 $ 5,373,740 (1) Includes Assisted/Senior living revenue of $95.6 million and $96.1 million for the years ended December 31, 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 | 12 Months Ended |
Dec. 31, 2018 | |
Loss Per Share | |
Loss Per Share | (6) 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 each of 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 any assumed conversions by the weighted-average number of outstanding common shares after giving effect to all potential dilutive common stock. 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): Year ended December 31, 2018 2017 Numerator: Loss from continuing operations $ (372,417) $ (959,172) Less: Net loss attributable to noncontrolling interests (137,186) (380,222) Loss from continuing operations attributable to Genesis Healthcare, Inc. $ (235,231) $ (578,950) Loss from discontinued operations, net of taxes — (32) Net loss attributable to Genesis Healthcare, Inc. $ (235,231) $ (578,982) Denominator: Weighted-average shares outstanding for basic and diluted net loss per share 101,007 94,217 Basic and diluted net loss per common share: Loss from continuing operations attributable to Genesis Healthcare, Inc. $ (2.33) $ (6.15) Loss from discontinued operations, net of taxes — — Net loss attributable to Genesis Healthcare, Inc. $ (2.33) $ (6.15) The following shares were excluded from the computation of dilutive net loss per common share in the years ended December 31, 2018 and 2017, as their inclusion would have been anti-dilutive (in thousands): Year ended December 31, 2018 2017 Exchange of noncontrolling interests 60,144 61,973 Employee and director unvested restricted stock units 816 887 Stock warrants 1,395 25 The combined impact of the assumed conversion to common stock and the related tax implications attributable to the noncontrolling interest, the grants under the 2015 Omnibus Equity Incentive Plan (2015 Plan), and stock warrants are anti-dilutive to EPS because the Company is in a net loss position for the years ended December 31, 2018 and 2017. As of December 31, 2018, there were 59,700,801 units attributable to the noncontrolling interests outstanding. In the year ended December 31, 2018, the Company issued a warrant to purchase 600,000 shares of its Class A common stock at an exercise price of $1.33 per share, exercisable beginning on September 6, 2018 and ending on March 6, 2023. Because the Company is in a net loss position for the year ended December 31, 2018, the impact of the assumed conversion of the warrants to common stock and the related tax implications are anti-dilutive to EPS. See Note 4 – “ Significant Transactions and Events – Restructuring Transactions – Omnibus Agreement.” In the year ended December 31, 2017, the Company issued a warrant to purchase 900,000 shares of its Class A common stock at an exercise price of $1.00 per share, exercisable beginning on August 1, 2018 and ending on December 30, 2022. Because the Company is in a net loss position for the year ended December 31, 2017, the impact of the assumed conversion of the warrants to common stock and the related tax implications are anti-dilutive to EPS. See Note 4 – “ Significant Transactions and Events – Lease Amendments and Terminations – Omega Amendment.” |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2018 | |
Segment Information | |
Segment Information | (7) The Company has three reportable operating segments: (i) inpatient services; (ii) rehabilitation therapy services; and (iii) other services. For additional information on these reportable segments see Note 1 – “ General Information – Description of Business .” A summary of the Company’s segmented revenues follows (in thousands, except percentages): Year ended December 31, 2018 2017 Increase / (Decrease) Revenue Revenue Revenue Revenue Dollars Percentage Dollars Percentage Dollars Percentage Revenues: Inpatient services: Skilled nursing facilities $ 4,195,596 84.3 % $ 4,522,738 84.1 % $ (327,142) (7.2) % Assisted/Senior living facilities 95,571 1.9 % 96,109 1.8 % (538) (0.6) % Administration of third party facilities 8,733 0.2 % 8,991 0.2 % (258) (2.9) % Elimination of administrative services (3,027) — % (1,536) — % (1,491) 97.1 % Inpatient services, net 4,296,873 86.4 % 4,626,302 86.1 % (329,429) (7.1) % Rehabilitation therapy services: Total therapy services 889,069 17.9 % 983,370 18.3 % (94,301) (9.6) % Elimination intersegment rehabilitation therapy services (341,155) (6.9) % (379,764) (7.1) % 38,609 (10.2) % Third party rehabilitation therapy services 547,914 11.0 % 603,606 11.2 % (55,692) (9.2) % Other services: Total other services 161,038 3.2 % 166,098 3.1 % (5,060) (3.0) % Elimination intersegment other services (29,175) (0.6) % (22,266) (0.4) % (6,909) 31.0 % Third party other services 131,863 2.6 % 143,832 2.7 % (11,969) (8.3) % Net revenues $ 4,976,650 100.0 % $ 5,373,740 100.0 % $ (397,090) (7.4) % A summary of the Company’s condensed consolidated statement of operations follows (in thousands): Year ended December 31, 2018 Rehabilitation Inpatient Therapy Other Services Services Services Corporate Eliminations Consolidated Net revenues $ 4,299,900 $ 889,069 $ 160,913 $ 125 $ (373,357) $ 4,976,650 Salaries, wages and benefits 1,944,091 733,763 109,054 — — 2,786,908 Other operating expenses 1,740,537 51,590 61,110 — (373,357) 1,479,880 General and administrative costs — — — 149,182 — 149,182 Lease expense 127,323 — 1,289 1,247 — 129,859 Depreciation and amortization expense 193,930 12,779 684 13,503 — 220,896 Interest expense 367,562 55 36 96,085 — 463,738 Loss on early extinguishment of debt — — — 391 — 391 Investment income — — — (6,832) — (6,832) Other (income) loss (14,872) 1,942 78 (68) — (12,920) Transaction costs — — — 31,953 — 31,953 Long-lived asset impairments 104,997 — — — — 104,997 Goodwill and identifiable intangible asset impairments 3,538 — — — — 3,538 Equity in net (income) loss of unconsolidated affiliates — — — (1,608) 1,508 (100) (Loss) income before income tax benefit (167,206) 88,940 (11,338) (283,728) (1,508) (374,840) Income tax benefit — — — (2,423) — (2,423) (Loss) income from continuing operations $ (167,206) $ 88,940 $ (11,338) $ (281,305) $ (1,508) $ (372,417) Year ended December 31, 2017 Rehabilitation Inpatient Therapy Other Services Services Services Corporate Eliminations Consolidated Net revenues $ 4,627,838 $ 983,370 $ 165,598 $ 500 $ (403,566) $ 5,373,740 Salaries, wages and benefits 2,098,249 823,668 114,951 — — 3,036,868 Other operating expenses 1,850,101 87,915 48,663 — (403,565) 1,583,114 General and administrative costs — — — 167,718 — 167,718 Lease expense 144,554 — 1,211 1,760 — 147,525 Depreciation and amortization expense 223,443 14,711 675 16,957 — 255,786 Interest expense 415,162 56 37 84,127 — 499,382 Gain on early extinguishment of debt — — — (6,566) — (6,566) Investment income — — — (5,328) — (5,328) Other loss (income) 7,802 732 180 (241) — 8,473 Transaction costs — — — 14,325 — 14,325 Customer receivership and other related charges — 90,864 — — — 90,864 Long-lived asset impairments 189,494 1,881 — — — 191,375 Goodwill and identifiable intangible asset impairments 360,046 — — — — 360,046 Equity in net (income) loss of unconsolidated affiliates — — — (2,183) 1,940 (243) Loss before income tax expense (661,013) (36,457) (119) (270,069) (1,941) (969,599) Income tax benefit — — — (10,427) — (10,427) Loss from continuing operations $ (661,013) $ (36,457) $ (119) $ (259,642) $ (1,941) $ (959,172) The following table presents the segment assets as of December 31, 2018 compared to December 31, 2017 (in thousands): December 31, 2018 December 31, 2017 Inpatient services $ 3,735,778 $ 4,303,370 Rehabilitation therapy services 329,687 351,711 Other services 36,240 50,127 Corporate and eliminations 161,918 82,657 Total assets $ 4,263,623 $ 4,787,865 |
Restricted Investments in Marke
Restricted Investments in Marketable Securities | 12 Months Ended |
Dec. 31, 2018 | |
Restricted Investments in Marketable Securities | |
Restricted Investments in Marketable Securities | (8) The current portion of restricted investments in marketable securities principally represents an estimate of the level of outstanding self-insured losses the Company expects to pay in the succeeding year through its wholly owned captive insurance company. See Note 22 – “ Commitments and Contingencies – Loss Reserves For Certain Self-Insured Programs .” Restricted investments in marketable securities at December 31, 2018 consist of the following (in thousands): Unrealized losses Amortized Unrealized Less than Greater than cost gains 12 months 12 months Fair value Restricted investments in marketable securities: Mortgage/government backed securities $ 11,945 $ 4 $ — $ (130) $ 11,819 Corporate bonds 56,199 49 (42) (387) 55,819 Government bonds 68,767 76 (2) (326) 68,515 $ 136,911 $ 129 $ (44) $ (843) 136,153 Less: Current portion of restricted investments (35,631) Long-term restricted investments $ 100,522 Restricted investments in marketable securities at December 31, 2017 consist of the following (in thousands): Unrealized losses Amortized Unrealized Less than Greater than cost gains 12 months 12 months Fair value Restricted investments in marketable securities: Mortgage/government backed securities $ 7,956 $ — $ — $ (108) $ 7,848 Corporate bonds 52,528 26 (106) (123) 52,325 Government bonds 65,842 509 (86) (322) 65,943 $ 126,326 $ 535 $ (192) $ (553) 126,116 Less: Current portion of restricted investments (33,015) Long-term restricted investments $ 93,101 Maturities of restricted investments yielded proceeds of $65.7 million and $43.8 million for the years ended December 31, 2018 and 2017, respectively. Sales of investments yielded proceeds of $3.5 million and $26.0 million for the years ended December 31, 2018 and 2017, respectively. Associated gross realized gain and (loss) for the year ended December 31, 2018 were de minimis. Associated gross realized gain and (loss) for the year ended December 31, 2017 were $0.5 million and $(0.7) million, respectively. The majority of the Company’s investments are investment grade government and corporate debt securities that have maturities of five years or less, and the Company has both the ability and intent to hold the investments until maturity. Restricted investments in marketable securities held at December 31, 2018 mature as follows (in thousands): Amortized Fair cost value Due in one year or less $ 42,833 $ 42,657 Due after 1 year through 5 years 91,078 90,480 Due after 5 years through 10 years — — Due after 10 years 3,000 3,016 $ 136,911 $ 136,153 Actual maturities may differ from stated maturities because borrowers may have the right to call or prepay certain obligations and may exercise that right with or without prepayment penalties. The Company has issued letters of credit totaling $127.4 million at December 31, 2018 to its third party administrators and the Company’s excess insurance carriers. Restricted cash of $6.7 million and restricted investments with an amortized cost of $136.9 million and a market value of $136.2 million are pledged as security for these letters of credit as of December 31, 2018. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property and Equipment | |
Property and Equipment | (9) Property and equipment consisted of the following as of December 31, 2018 and 2017 (in thousands): December 31, 2018 December 31, 2017 Land, buildings and improvements $ 469,575 $ 591,022 Capital lease land, buildings and improvements 693,546 752,657 Financing obligation land, buildings and improvements 2,274,211 2,525,551 Equipment, furniture and fixtures 417,684 453,230 Construction in progress 9,340 30,294 Gross property and equipment 3,864,356 4,352,754 Less: accumulated depreciation (976,802) (939,155) Net property and equipment $ 2,887,554 $ 3,413,599 In the year ended December 31, 2018, the Company divested 55 skilled nursing facilities resulting in write-offs of net property and equipment of $248.5 million. See Note 4 – “ Significant Transactions and Events - Divestiture of Non-Strategic Facilities.” In the year ended December 31, 2018, the Company recognized long-lived impairment charges resulting in write-offs of net property and equipment of $105.0 million. See Note 20 – “ Asset Impairment Charges – Long-Lived Assets with a Definite Useful Life.” The impact of divestitures and impairments in the year ended December 31, 2018 by property and equipment line description is as follows: Divestitures Impairments Land, buildings and improvements $ (64,738) $ (40,942) Capital lease land, buildings and improvements (38,804) (11,782) Financing obligation land, buildings and improvements (211,143) (85,643) Equipment, furniture and fixtures (41,795) (3,843) Construction in progress (300) — Gross property and equipment (356,780) (142,210) Less: accumulated depreciation 108,287 37,213 Net property and equipment $ (248,493) $ (104,997) At December 31, 2018, the Company classified the property and equipment of seven skilled nursing facilities as assets held for sale resulting in a total net reduction of property and equipment of $16.1 million, which was primarily classified in the “Land, buildings and improvements” line item. See Note 21 – “ Assets Held for Sale.” In the year ended December 31, 2018, construction in progress was reduced by approximately $32.7 million due to a newly constructed PowerBack Rehabilitation facility placed into service in August 2018. The cost of the new facility was coded primarily to the “Financing obligation land, buildings and improvements” line item. |
Goodwill and Identifiable Intan
Goodwill and Identifiable Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Identifiable Intangible Assets | |
Goodwill and Identifiable Intangible Assets | (10) Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The changes in the carrying value of goodwill are as follows (in thousands): Inpatient Rehabilitation Therapy Services Other Services Consolidated Balance at January 1, 2017 $ 355,070 $ 73,814 $ 11,828 $ 440,712 Goodwill associated with divestitures (3,600) — — (3,600) Goodwill impairment charge (351,470) — — (351,470) 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 December 31, 2018 Goodwill 351,470 73,814 11,828 437,112 Accumulated impairment losses (351,470) — — (351,470) $ — $ 73,814 $ 11,828 $ 85,642 For the year ended December 31, 2017, the Company recognized goodwill impairment charges of $351.5 million in its inpatient segment. See Note 20 – “ Asset Impairment Charges - Goodwill .” Identifiable intangible assets consist of the following at December 31, 2018 and 2017 (in thousands): December 31, 2018 Weighted Average Remaining Life (Years) Customer relationship assets, net of accumulated amortization of $65,756 $ 47,077 8 Favorable leases, net of accumulated amortization of $33,404 21,449 10 Trade names 50,556 Indefinite Identifiable intangible assets $ 119,082 December 31, 2017 Weighted Average Remaining Life (Years) Customer relationship assets, net of accumulated amortization of $55,285 $ 57,548 8 Favorable leases, net of accumulated amortization of $33,051 34,872 10 Trade names 50,556 Indefinite Identifiable intangible assets $ 142,976 Acquisition-related identified intangible assets consist of customer relationship assets, favorable lease contracts and trade names. Customer relationship assets exist in the Company’s rehabilitation services, respiratory services, management services and medical staffing businesses. These assets are amortized on a straight-line basis over the expected period of benefit. 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. See Note 12 – “ Lease and Lease Commitments .” The Company’s trade names have value, in particular in the rehabilitation business which markets its services to other providers of skilled nursing and assisted/senior living services. The trade name asset has an indefinite life and is measured no less than annually or if indicators of potential impairment become apparent. Amortization expense related to customer relationship assets, which is included in depreciation and amortization expense, for the years ended December 31, 2018 and 2017 was $10.5 million and $10.3 million, respectively. Amortization expense related to favorable leases, which is included in lease expense, for the years ended December 31, 2018 and 2017 was $6.5 million and $6.9 million, respectively. Based upon amounts recorded at December 31, 2018, amortization expense related to identifiable intangible assets is estimated to be $15.3 million in 2019, $9.9 million in 2020, $9.1 million in 2021, $5.9 million in 2022, and $5.4 million in 2023 and $22.9 million, thereafter. The Company recorded asset impairment charges totaling $3.5 million and $8.5 million related to identifiable intangible assets for the year ended December 31, 2018 and 2017, respectively, which are included in goodwill and identifiable intangible asset impairments on the consolidated statements of operations. In 2018, a $3.5 million impairment of favorable lease assets associated with the underperforming properties was recorded. In 2017, the impairment charges are comprised of a $7.3 million impairment of management contract assets related to the expiration of and lack of a sustained, state sponsored replacement program for the Texas Minimum Payment Amount Program (MPAP) and a $1.2 million impairment of favorable lease assets associated with the underperforming properties. The impairment associated with the expired MPAP contract represented the only management contract identifiable intangible asset of the Company. See Note 20 – “ Asset Impairment Charges - Identifiable Intangible Assets with a Definite Useful Life – Management Contracts ” and “ Asset Impairment Charges – Identifiable Intangible Assets with a Definite Useful Life – Favorable Leases .” |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2018 | |
Long-Term Debt. | |
Long-Term Debt | (11) Long-term debt at December 31, 2018 and 2017 consisted of the following (in thousands): December 31, 2018 December 31, 2017 Asset based lending facilities, net of debt issuance costs of $11,335 and $0 at December 31, 2018 and December 31, 2017, respectively $ 419,289 $ — Revolving credit facilities, net of debt issuance costs of $0 and $10,109 at December 31, 2018 and December 31, 2017, respectively — 303,091 Term loan agreements, net of debt issuance costs of $1,851 and $3,020 and debt premium balance of $8,446 and $0 at December 31, 2018 and December 31, 2017, respectively 184,652 120,706 Real estate loans, net of debt issuance costs of $5,360 and $3,486 and debt premium balance of $28,992 and $0 at December 31, 2018 and December 31, 2017, respectively 307,690 281,039 HUD insured loans, net of debt issuance costs of $5,247 and $5,590 and debt premium balance of $860 and $13,590 at December 31, 2018 and December 31, 2017, respectively 181,762 263,827 Notes payable 81,398 68,122 Mortgages and other secured debt (recourse) 4,190 12,536 Mortgages and other secured debt (non-recourse), net of debt issuance costs of $187 and $99 and debt premium balance of $1,520 and $1,618 at December 31, 2018 and December 31, 2017, respectively 26,483 27,978 1,205,464 1,077,299 Less: Current installments of long-term debt (122,531) (26,962) Long-term debt $ 1,082,933 $ 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 term 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 (as defined below), 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 $105.6 million in current installments of long-term debt at December 31, 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 $47.6 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 retired 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 December 31, 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 loan’s 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 December 31, 2018: Weighted Average ABL Credit Facilities Commitment Borrowings Interest Term loan facility $ 325,000 $ 325,000 8.80 % Revolving credit facility (Non-HUD) 155,000 65,181 8.80 % Revolving credit facility (HUD) 45,000 10,444 8.80 % Delayed draw term loan facility 30,000 30,000 13.80 % $ 555,000 $ 430,625 9.15 % As of December 31, 2018, the Company had a total borrowing base capacity of $436.9 million with outstanding borrowings under the ABL Credit Facilities of $430.6 million, leaving the Company with approximately $6.3 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 provides for term loans (the Term Loans) in the aggregate principal amount of $120.0 million, with scheduled annual amortization of 2.5% of the initial principal balance in years one, two and three, and 5.0% in year four. 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 December 31, 2018, the Term Loans and 2018 Term Loan had an outstanding principal balance of $178.1 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 minimum interest coverage ratio which requires the Company to maintain a coverage ratio, as defined therein, of no less than 1.70 to 1.0 through December 31, 2020 and increasing to 1.80 to 1.0 thereafter. The Term Loan Agreement includes a non-cash debt premium balance of $8.4 million at December 31, 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 (as defined below) 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 approximately 7.5% of all the Restructuring Transactions involving Welltower 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 13 – “ Financing Obligations .” 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 December 31, 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 30-day 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 (as defined below). On November 8, 2018, one of the MidCap Real Estate Loans was amended with an additional borrowing of $10.0 million. The proceeds were used to retire a maturing mortgage loan on a corporate office building. The office building has been added as collateral and the loan maturity remains March 30, 2023. The $10.0 million additional loan is subject to an annual interest rate equal to 30-day LIBOR (subject to a floor of 2.0%) plus an applicable margin of 6.25% with principal amortizing immediately and the balance due at maturity. 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. 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 December 31, 2018, the Company secured repayments or commitments totaling approximately $85 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 December 31, 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 5 remaining facilities subject to the Welltower Real Estate Loans. In the year ended December 31, 2018, the Welltower Real Estate Loans were paid down $69.7 million using proceeds from the MidCap Real Estate Loans and $15.7 million using proceeds from asset sales in Texas and Nevada. The Welltower Real Estate Loans have an outstanding principal balance of $201.1 million at December 31, 2018. The Welltower Real Estate Loans include a non-cash debt premium balance of $29.0 million at December 31, 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 to 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 13 – “ Financing Obligations .” On April 1, 2016, the Company acquired one skilled nursing facility and entered into a $9.9 million real estate bridge loan (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 December 31, 2018, the Company has 25 skilled nursing facility loans insured by HUD. The HUD insured loans have a combined aggregate principal balance of $213.8 million, which includes a $3.8 million debt premium. In the year ended December 31, 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 original terms ranging from 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 3.4%. 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. 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 December 31, 2018, the Company has total escrow reserve funds of $19.6 million with the loan servicer that are reported within prepaid expenses. The HUD loans of three skilled nursing facilities, balances included in the disclosures noted above, were reclassified as assets held for sale in the consolidated balance sheets at December 31, 2018. These three skilled nursing facilities had an aggregate principal balance of $26.6 million, net of debt issuance costs and debt premiums, and aggregate escrow reserve funds of $3.4 million. The three skilled nursing facilities are expected to be sold in early 2019. See Note 21 – “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 $7.8 million at December 31, 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 balance of $60.0 million at December 31, 2018. In connection with Welltower’s sale of 28 skilled nursing facilities to Cindat Best Years Welltower JV LLC 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 $13.6 million at December 31, 2018. The second note was converted into 3.0 million shares of common stock on November 13, 2017 and cancelled. The Company recorded a gain on early extinguishment of debt of $8.9 million. 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 of 2.1% at December 31, 2018, and maturity dates ranging from 2019 to 2020. On November 8, 2018, the mortgage loan of $10.0 million on one of the Company’s corporate office buildings matured and was refinanced through a MidCap Real Estate Loan. 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 5.2% at December 31, 2018, with maturity dates ranging 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 $1.5 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, the Welltower Real Estate Loans and the MidCap 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 December 31, 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 $1.2 billion, excluding debt issuance costs and other non-cash debt discounts and premiums, at December 31, 2018 is as follows (in thousands): Twelve months ended December 31, 2019 $ 122,565 2020 245,716 2021 20,499 2022 208,220 2023 419,804 Thereafter 172,822 Total debt maturity $ 1,189,626 |
Leases and Lease Commitments
Leases and Lease Commitments | 12 Months Ended |
Dec. 31, 2018 | |
Leases and Lease Commitments | |
Leases and Lease Commitments | (12) The Company leases certain facilities under capital and operating leases. Future minimum payments for the next five years and thereafter under such leases at December 31, 2018 are as follows (in thousands): Twelve months ended December 31, Capital Leases Operating Leases 2019 $ 88,793 $ 110,755 2020 89,397 109,391 2021 91,292 106,031 2022 93,281 84,003 2023 95,376 76,701 Thereafter 3,325,042 373,753 Total future minimum lease payments 3,783,181 $ 860,634 Less amount representing interest (2,813,068) Capital lease obligation 970,113 Less current portion (2,171) Long-term capital lease obligation $ 967,942 Capital Lease Obligations The capital lease obligations represent the present value of minimum lease payments under such capital lease arrangements, bear a weighted average imputed interest rates of 9.9% at December 31, 2018, and mature at dates ranging from 2026 to 2048. Deferred Lease Balances At December 31, 2018 and 2017, the Company had $21.4 million and $34.9 million, respectively, of favorable leases net of accumulated amortization, included in identifiable intangible assets, and $5.3 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, respectively, arise through the acquisition of leases in place which 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 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 December 31, 2018 and 2017, the Company had $17.9 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, Omega and Second Spring (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 December 31, 2018, the Company is in compliance with the financial covenants contained in the Master Lease Agreements. The Company has two master lease agreements with CBYW involving 28 of its facilities. The Company did not meet certain financial covenants contained in one of the master lease agreements involving nine of its facilities at December 31, 2018. The Company received a waiver for these covenant breaches. At December 31, 2018, the Company is in compliance with the financial covenants contained in the other master lease agreement. At December 31, 2018, the Company did not meet certain financial covenants contained in four leases related to 12 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 December 31, 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 | 12 Months Ended |
Dec. 31, 2018 | |
Financing Obligations | |
Financing Obligation | (13) Financing obligations represent the present value of minimum lease payments under such lease arrangements and bear a weighted average imputed interest rate of 9.2% at December 31, 2018, and mature at dates ranging from 2021 to 2048. The financing obligation includes a discount of $48.6 million at December 31, 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 11 – “ 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 December 31, 2018 are as follows (in thousands): Twelve months ended December 31, 2019 $ 237,335 2020 242,052 2021 245,311 2022 242,214 2023 247,852 Thereafter 6,661,624 Total future minimum lease payments 7,876,388 Less amount representing interest (5,141,448) Financing obligations $ 2,734,940 Less current portion (2,001) Long-term financing obligations $ 2,732,939 |
Stockholders' Deficit
Stockholders' Deficit | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders’ Deficit. | |
Stockholders' Deficit | (14) The total number of shares of all classes of stock that the Company shall have authority to issue is 1,200,000,000 consisting of: · 1,000,000,000 shares of Class A common stock, par value $0.001 per share, of which 101,235,935 shares and 97,100,738 shares were issued at December 31, 2018 and 2017, respectively; · 20,000,000 shares of Class B common stock, par value $0.001 per share, of which 744,396 shares and 744,396 shares were issued at December 31, 2018 and 2017, respectively; · 150,000,000 shares of Class C common stock, par value $0.001 per share, of which 59,700,801 shares and 61,561,393 shares were issued at December 31, 2018 and 2017, respectively; and · 30,000,000 shares of Preferred Stock, par value $0.001 per share, of which no shares were issued at December 31, 2018 and 2017, respectively. Capital Transactions with Stockholders and Noncontrolling Interests During the years ended December 31, 2018 and 2017, the Company distributed $0.4 million, respectively, to the stockholders and noncontrolling interests. These distributions represent tax payments made by the Company on the behalf of FC-GEN members. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Stock-Based Compensation | |
Stock-Based Compensation | (15) The Company provides stock-based compensation to attract and retain employees while also aligning employees’ interests with the interests of its shareholders. The 2015 Plan, which is shareholder-approved, permits the grant of various cash-based and equity-based awards to selected employees, directors, independent contractors and consultants of the Company. The 2015 Plan permits the grant of up to 24.4 million shares of Class A common stock, subject to certain adjustments and limitations. Stock-based compensation expense is comprised of restricted stock units, which are based on estimated fair value, made to certain employees and directors. The Company accounts for forfeitures when they occur. Restricted Stock Units The Company grants restricted stock units under the 2015 Plan. Each unit represents an obligation to deliver to the holder one share of the Company’s Class A common stock upon vesting. Restricted stock units are subject to some combination of service-based, performance-based, and market-based vesting conditions. Units subject to only service-based vesting conditions generally vest in equal installments over three years on the anniversary of the grant date with expense being recognized over the requisite service period. The fair value of such units is measured at the market price of the Company’s stock on the date of the grant. Units subject to performance-based or market-based vesting conditions are generally subject to a service-based vesting condition (i.e. cliff vest). Consequently, expense of such awards is recognized over the requisite service period. Units subject to performance-based vesting conditions generally cliff vest upon satisfaction of performance targets. The fair value of such units is measured at the market price of the Company’s stock on the date of the grant. Units subject to market-based vesting conditions generally cliff vest upon the Company’s share price meeting specified target prices. The fair value of such units is measured using the Monte-Carlo simulation model, which incorporates into the fair value determination the possibility that the target share prices may not be met. Further, expense related to these units is recognized regardless of whether the market-based vesting condition is satisfied, provided that the requisite service has been provided. The Company’s Monte-Carlo fair value assumptions are as follows: December 31, 2018 December 31, 2017 Expected term, in years Risk-free interest rate Volatility Dividends N/A N/A A summary of the Company’s non-vested restricted stock units as of and for the year ended December 31, 2018 is shown below (number of units in thousands): Number of Restricted Stock Units Weighted-Average Grant Date Fair Value Non-vested balance at January 1, 2018 9,666 $ 1.99 Granted 5,718 2.43 Vested (2,651) 2.89 Forfeited (2,541) 2.43 Non-vested balance at December 31, 2018 10,192 $ 1.89 For the year ended December 31, 2017, the weighted-average grant date fair value of restricted stock units granted was $1.46. As of December 31, 2018, there was approximately $14.4 million of unrecognized expense related to non-vested restricted stock units, which is expected to be recognized over a weighted-average term of 2.0 years. During the years ended December 31, 2018 and 2017, the fair value of restricted stock units that vested was $5.8 million and $3.4 million, respectively. At December 31, 2018, 11.6 million shares of the Company’s Class A common stock are available for delivery under the 2015 Plan. Stock-based compensation expense related to restricted stock units included in general and administrative costs was $8.8 million and $8.4 million for the years ended December 31, 2018 and 2017, respectively. The income tax benefit for stock-based compensation expense was $4.8 million and $3.1 million for the years ended December 31, 2018 and 2017, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Income Taxes | (16) The Company’s provision for income taxes was based upon management’s estimate of taxable income or loss for each respective accounting period. The Company recognizes an asset or liability for the deferred tax consequences of temporary differences between the tax bases of assets including net operating loss and credit carryforwards and liabilities and the amounts reported in the financial statements. These temporary differences would result in taxable or deductible amounts in future years when the reported amounts of the assets are recovered or liabilities are settled. The Company effectively owns 63.2% 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. The taxable income of the partnership is subject to the income allocation rules of IRC Sec. 704. Management believes the mechanics of IRC Sec. 704 will cause a greater portion of the temporary tax deductions to be allocated to the Company. This allocation reduced the Company’s taxable income for the years ended December 31, 2018 and 2017, respectively. Income Tax Provision Total income tax (benefit) expense was as follows (in thousands): Year ended December 31, 2018 2017 Continuing operations $ (2,423) $ (10,427) Discontinued operations — 48 Stockholder's deficit (115) (67) Total $ (2,538) $ (10,446) The components of the provision for income taxes on income (loss) from continuing operations for the periods presented were as follows (in thousands): Year ended December 31, 2018 2017 Current: Federal $ 1,064 $ 1,592 State (12) 157 1,052 1,749 Deferred: Federal (521) (12,304) State (2,954) 128 (3,475) (12,176) Total $ (2,423) $ (10,427) At December 31, 2018 and 2017, the current income taxes were primarily generated on the taxable income of the Company’s Bermuda captive insurance company. Reasonable estimates for the Company’s state and local provision were made based on the Company’s analysis of the state’s enacted response to U.S. federal tax reform. During the years ended December, 31, 2018 and 2017, the Company’s rehabilitation therapy services business operations within the People’s Republic of China and Hong Kong generated both U.S. federal and foreign taxable losses. The deferred tax assets generated by the foreign operations were fully valued at December 31, 2018 and 2017. Management does not anticipate these operations will generate significant taxable income in the near term. The operations currently do not have a material effect on the Company’s effective tax rate. Under the U.S. Tax Cuts and Jobs Act, 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 recorded a deferred tax asset for the deferred interest that it estimates will not be deducted in tax year 2018. The deferred interest can be carried forward indefinitely, such that it may be deductible in future tax years based upon certain limitations. The Company has estimated the impact of the U.S. Tax Cuts and Jobs Act on state income taxes reflected in its income tax benefit for the years ended December 31, 2018 and 2017. In assessing the requirement for, and amount of, a valuation allowance in accordance with the more likely than not standard for all periods, the Company gives appropriate consideration to all positive and negative evidence related to the realization of its deferred tax assets. The assessment considers the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods and the Company’s experience with operating loss and tax credit expirations. A history of cumulative losses is a significant piece of negative evidence used in the assessment. At December 31, 2018 and 2017, the Company has established a full valuation allowance against the majority of its net deferred tax assets in the amount of $342.6 million and $264.1 million, respectively, based on management’s assessment that the Company will not realize its deferred tax assets. The valuation allowance does not include the discounted unpaid loss reserve deferred tax asset of the Company’s captive insurance company. Total income tax (benefit) expense for the periods presented differed from the amounts computed by applying the federal income tax rate of 21% for the year ended December 31, 2018 and 35% for the year ended December 31, 2017 to the income (loss) before income taxes as illustrated below (in thousands): Year ended December 31, 2018 2017 Computed “expected” benefit $ (78,716) $ (339,359) (Reduction) increase in income taxes resulting from: State and local income taxes, net of federal tax benefit 113 149 Income tax credits (2,397) (2,840) Goodwill impairment write-off — 53,688 Non-controlling interest 28,366 138,331 Adjustment to deferred taxes, including credits and valuation allowance 50,302 139,324 FIN 48 (38) (81) Other, net (53) 361 Total income tax benefit $ (2,423) $ (10,427) The Company’s effective income tax rates were 0.6% and 1 .1% in the years ended December 31, 2018 and 2017, respectively. The Company recorded the impact of the U.S. federal rate decrease from 35% to 21% upon its deferred tax assets and liabilities within its tax provision for the year ended December 31, 2017. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2018 and 2017 are presented below (in thousands): 2018 2017 Deferred tax assets: Investment in partnership 179,701 156,049 Net operating loss carryforwards 121,111 80,615 Discounted unpaid loss reserve 3,567 3,147 Deferred interest deduction 8,844 — Other intangible 6,550 3,542 General business credits 28,729 24,325 Total deferred tax assets 348,502 267,678 Valuation allowance (342,635) (264,098) Deferred tax assets, net of valuation allowance 5,867 3,580 Deferred tax liabilities: Long-lived assets: intangible property (6,281) (7,584) Total deferred tax liabilities (6,281) (7,584) Net deferred tax liabilities (414) (4,004) Uncertain Tax Positions The Company follows the provisions of the authoritative guidance for accounting for uncertainty in income taxes which clarifies the accounting for uncertain income tax issues recognized in an entity’s financial statements. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in an income tax return. The Company, excluding its corporate groups, is only subject to state and local income tax in certain jurisdictions. The Company’s corporate groups are subject to federal, state and local income taxes. The Company is also subject to income based taxes in the People’s Republic of China and Hong Kong. However, these business operations have generated current taxable losses since their inception. Significant judgment is required in evaluating its uncertain tax positions and determining its provision for income taxes. Under U.S. GAAP, the Company utilizes a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company is subject to various federal and state income tax audits in the ordinary course of business. Such audits could result in increased tax payments, interest and penalties. While the Company believes its tax positions are appropriate, it cannot assure that the various authorities engaged in the examination of its income tax returns will not challenge the Company’s positions. The Company believes it has adequately reserved for its uncertain tax positions, though no assurance can be given that the final tax outcome of these matters will not be different. The Company adjusts these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the expiration of the statute of limitations. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest. A reconciliation of unrecognized tax benefits follows (in thousands): Balance, December 31, 2016 $ 79 Additions based upon tax positions related to the current year 36 Balance, December 31, 2017 $ 115 Reductions due to lapses of applicable statute of limitations (38) Balance, December 31, 2018 $ 77 The Company’s unrecognized tax benefits reserve for uncertain tax positions primarily related to the accrual of penalty on underpayment of quarterly estimated tax. All of the gross unrecognized tax benefits would affect the effective tax rate if recognized. Unrecognized tax benefits are adjusted in the period in which new information about a tax position becomes available or the final outcome differs from the amount recorded. Unrecognized tax benefits are not expected to change significantly over the next twelve months. The Company recognizes potential accrued interest related to unrecognized tax benefits in income tax expense. Penalties, if incurred, would also be recognized as a component of income tax expense. The amount of accrued interest related to unrecognized tax benefits was less than $0.1 million as of both December 31, 2018 and 2017. Generally, the Company has open tax years for state purposes subject to tax audit on average of between three years to six years. The Company’s U.S. income tax returns from 2012 are open and could be subject to examination. 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 will increase and its purchase price will 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 during the twelve months ended December 31, 2018 equating to 1,860,912 Class A shares. The exchanges during the twelve months ended December 31, 2018 resulted in a $9.6 million IRC Section 754 tax basis step-up in the tax deductible goodwill of FC-GEN. There were exchanges of 2,287,987 FC-GEN units and Class C shares during the twelve months ended December 31, 2017 equating to 2,288,381 Class A shares. The exchanges during the twelve months ended December 31, 2017 resulted in a $14.9 million IRC Section 754 tax basis step-up in the tax deductible goodwill of FC-GEN. The Company is party to 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 returns for the taxable year with respect to which the payment obligation arises. Payments under the TRA generally will be based on the tax reporting positions that FC-GEN will determine. Although FC-GEN does not expect the Internal Revenue Service (IRS) to challenge the Company’s tax reporting positions, FC-GEN will not be reimbursed for any overpayments previously made under the TRA, but any overpayments will reduce future payments. As a result, in certain circumstances, payments could be made under the TRA in excess of the benefits that FC-GEN actually realizes in respect of the tax attributes subject to the TRA. The term of the TRA generally will continue until all applicable tax benefits have been utilized or expired, unless the Company exercises its right to terminate the TRA and make an early termination payment. In certain circumstances (such as certain changes in control, the election of the Company to exercise its right to terminate the agreement and make an early termination payment or an IRS challenge to a tax basis increase) it is possible that cash payments under the TRA may exceed actual cash savings. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions | |
Related Party Transactions | (17) 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 $126.4 million and $142.2 million in the years ended December 31, 2018 and 2017, respectively. The services resulted in net accounts receivable balances of $32.3 million and $32.0 million at December 31, 2018 and 2017, respectively. In the year ended December 31, 2018, gross accounts receivable of $58.9 million were converted to a note receivable. A $55.0 million reserve recorded in 2017 was posted against the note 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. Certain members of the Company’s board of directors indirectly beneficially hold ownership interests in FC Compassus LLC (Compassus) totaling less than 10% in the aggregate. The Company is party to certain immaterial preferred provider and affiliation agreements with Compassus. Separately, the Company has a note receivable balance of $19.0 million from Compassus outstanding at December 31, 2018. The note, which is comprised of principal of $12.0 million and accrued interest, is associated with the Company’s sale of its hospice and home health operations to Compassus, which was completed during 2016. Certain members of the Company’s board of directors indirectly beneficially hold ownership interests in Trident USA totaling less than 10% in the aggregate. The Company is party to mobile radiology and laboratory/diagnostic services agreements with Trident USA. Fees for these services were $12.6 million and $11.8 million in the years ended December 31, 2018 and 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 (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 approximately 4% in the aggregate. These members have earned acquisition fees, and may earn asset management fees and other fees with respect to the Next Landlord Entities. See Note 4 – “ Significant Transactions and Events – Lease Amendments and Terminations - Sabra Amendments and Terminations. ” In the third quarter of 2018, the Company began providing rehabilitation services to five health care centers operated by affiliates of NSPR Centers, LLC (NSpire). Certain members of the Company’s board of directors indirectly hold ownership interests in NSpire. In the aggregate, these members of the Company’s board of directors beneficially own a majority of the ownership interests in NSpire. Through December 31, 2018, the Company has recorded $1.9 million in revenues for services provided to NSpire. |
Defined Contribution Plan
Defined Contribution Plan | 12 Months Ended |
Dec. 31, 2018 | |
Defined Contribution Plan | |
Defined Contribution Plan | (18) The Company sponsors a defined contribution plan covering substantially all employees who meet certain eligibility requirements. The Company did not match employee contributions for the defined contribution plan in 2018 and 2017. |
Other (Income) Loss
Other (Income) Loss | 12 Months Ended |
Dec. 31, 2018 | |
Other (Income) Loss. | |
Other (Income) Loss | (19) In the years ended December 31, 2018 and 2017, the Company completed multiple transactions, including the divestitures of numerous owned assets and the termination and refinancing of certain facilities subject to lease agreements. See Note 4 - “ Significant Transactions and Events .” These transactions resulted in a net (gain) loss recorded as other (income) loss in the consolidated statements of operations. The following table summarizes those net (gains) losses (in thousands): Year ended December 31, 2018 2017 Gain on lease terminations and amendments - unamortized straight-lining, favorable and unfavorable lease balances $ (19,161) $ (8,144) Gain on lease terminations and amendments - unamortized financing lease and capital lease obligations (56,376) (807) Loss recognized for exit costs associated with divestiture of operations 21,459 12,940 Loss on a cease to use asset associated with a facility sublease 2,016 4,062 Loss on lease termination settlement 37,541 — Loss associated with lease extensions or newly leased operations, net 1,601 — Loss on sale of owned assets — 422 Total other (income) loss $ (12,920) $ 8,473 |
Asset Impairment Charges
Asset Impairment Charges | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Identifiable Intangible Assets | |
Asset Impairment Charges | ( 20) Long-Lived Assets with a Definite Useful Life In each quarter, the Company’s long-lived assets with a definite useful life were tested for impairment at the lowest levels for which there are identifiable cash flows. The Company estimated the future net undiscounted cash flows expected to be generated from the use of the long-lived assets and then compared the estimated undiscounted cash flows to the carrying amount of the long-lived assets. The cash flow period was based on the remaining useful 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 years ended December 31, 2018 and 2017, the Company recognized impairment charges in the inpatient segment totaling $105.0 m illion and $191.4 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. During the year ended December 31, 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 asset 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 years ended December 31, 2018 and 2017, the Company recognized impairment charges on its favorable lease intangible assets with a definite useful life of $3.5 million and $1.2 million, respectively. This charge is presented in goodwill and identifiable intangible asset impairments on the consolidated statements of operations. Identifiable Intangible Assets with an Indefinite Useful Life Indefinite-lived intangible assets consist of trade names. In conjunction with the annual goodwill impairment test, the Company performed an assessment of its indefinite-lived intangible assets, noting no impairment existed for the years ended December 31, 2018 and 2017. Goodwill The Company performed its annual goodwill impairment test as of September 30, 2018 and 2017. For the year ended December 31, 2018, the Company performed a qualitative impairment test, which indicated that no impairment existed. For the year ended December 31, 2017, as a result of changes in the regulatory and reimbursement environment, the Company performed a quantitative impairment test for all reporting units, the results of which indicated that the carrying value of the inpatient reporting unit exceeded its fair value. Consequently, an impairment of $351.5 million, which represented the entire balance of goodwill associated with the inpatient reporting unit, was recorded during the year ended December 31, 2017. This impairment charge was presented in goodwill and identifiable intangible asset impairments on the consolidated statements of operations. The Company conducts the test at the reporting unit level that management has determined aligns with the Company’s segment reporting. See Note 7 – “Segment Information” for a summary of the changes in the carrying value of goodwill by segment . Adverse changes in the operating environment and related key assumptions used to determine the fair value of the Company’s reporting units and indefinite-lived intangible assets may result in future impairment charges for a portion or all of these assets. Specifically, if the rate of growth of government and commercial revenues earned by the Company’s reporting units were to be less than projected or if healthcare reforms were to negatively impact the Company’s business, an impairment charge of a portion or all of these assets may be required. An impairment charge could have a material adverse effect on the Company’s business, financial position and results of operations, but would not be expected to have an impact on the Company’s cash flows or liquidity. The Company measures the fair value of each reporting unit to determine whether the fair value exceeds the carrying value based upon the market capitalization including a control premium and a discounted cash flow analysis. Determining fair value requires the exercise of significant judgment, including judgment about appropriate discount rates, perpetual growth rates, the amount and timing of expected future cash flows, as well as relevant comparable company earnings multiples for the market-based approach. The cash flows employed in the discounted cash flow analyses are based on the Company’s internal projection model and consider an estimate of the applicable industry growth rates. The discount rates used in the discounted cash flow analyses are intended to reflect the risks inherent in the future cash flows of the reporting unit and are based on an estimated cost of capital, which is determined based on the Company’s estimated cost of capital relative to its capital structure. In addition, the market-based approach utilizes comparable company public trading values, research analyst estimates and, where available, values observed in private market transactions. |
Assets Held for Sale
Assets Held for Sale | 12 Months Ended |
Dec. 31, 2018 | |
Assets Held for Sale | |
Assets Held for Sale | (21) 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, as amended, to sell the facilities for $109.5 million. The transaction marks an exit from the inpatient business in Texas. Thirteen of the facilities were subject to Welltower Real Estate Loans, nine of the facilities were subject to HUD-insured loans and one facility was leased and accounted for as a financing obligation. The disposal group does not meet the criteria as a discontinued operation. The sale of the operations of all 23 skilled nursing facilities and the real estate of 16 skilled nursing facilities closed in the fourth quarter of 2018. The sale of the real estate of the remaining seven skilled nursing facilities is expected to close in early 2019. See Note 4 – “ Significant Transactions and Events – Divestiture of Non-Strategic Facilities.” The Company has classified as assets held for sale in its consolidated balance sheets as of December 31, 2018, the real property and other balances associated with the remaining 7 skilled nursing facilities. The following table sets forth the major classes of assets and liabilities included as part of the disposal group that are classified as assets held for sale as of December 31, 2018 (in thousands): December 31, 2018 Current assets: Prepaid expenses $ 3,375 Long-term assets: Property and equipment, net of accumulated depreciation of $3,640 16,087 Total assets $ 19,462 Current liabilities: Current installments of long-term debt $ 639 Long-term liabilities: Long-term debt 25,942 Total liabilities $ 26,581 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | (22) 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 and workers’ compensation claims. Policies are typically written for a duration of 12 months and are measured on a “claims made” basis. Regarding workers’ compensation, the Company self-insures to its deductible and purchases statutorily required insurance coverage in excess of its deductible. There is a risk that amounts funded by the Company’s self-insurance programs may not be sufficient to respond to all claims asserted under those programs. Insurance reserves represent estimates of future claims payments. This liability includes an estimate of the development of reported losses and losses incurred but not reported. Provisions for changes in insurance reserves are made in the period of the related coverage. The Company also considers amounts that may be recovered from excess insurance carriers in estimating the ultimate net liability for such risks. The Company’s management employs its judgment and periodic independent actuarial analysis in determining the adequacy of certain self-insured workers’ compensation and general and professional liability obligations recorded as liabilities in the Company’s financial statements. The Company evaluates the adequacy of its self-insurance reserves on a semi-annual basis or more often 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 operate under the oversight of the Company’s in-house risk management and legal functions. These functions ensure that the claims are properly administered so that the historical data is reliable for estimation purposes. Case reserves, which are approved by the Company’s legal and risk management departments, are determined based on an estimate of the ultimate settlement and/or ultimate loss exposure of individual claims. The reserves for loss for workers’ compensation risks are discounted based on actuarial estimates of claim payment patterns using a discount rate for the current policy year of 2.9%. 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 $8.3 million and $6.7 million as of December 31, 2018 and 2017, respectively. The reserves for general and professional liability are recorded on an undiscounted basis. The provision for general and professional liability risks totaled $102.5 million and $134.0 million for the years ended December 31, 2018 and 2017, respectively. The 2018 provision reflects reduced claims volume due to a combination of the Company’s portfolio optimization strategy, divestiture of underperforming non-strategic operations, tort reforms in historically high volume states, and favorable development of historical claim values following a targeted claims settlement campaign. The reserves for general and professional liability were $435.3 million and $442.9 million as of December 31, 2018 and 2017, respectively. The provision for loss for workers’ compensation risks totaled $49.9 million and $54.1 million for the years ended December 31, 2018 and 2017, respectively. The reserves for workers’ compensation risks were $168.3 million and $174.6 million as of December 31, 2018 and 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 $16.6 million and $17.5 million as of December 31, 2018 and 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, with the exception of the specific matters noted below, management does not believe the results of such litigation and regulatory investigations would have a material adverse effect on the results of operations, financial position or cash flows of the Company. However, the Company’s assessment of materiality may be affected by limited information (particularly in the early stages of government investigations). Accordingly, the Company’s assessment of materiality may change in the future based upon availability of discovery and further developments in the proceedings at issue. The results of legal proceedings are inherently uncertain, and material adverse outcomes are possible. From time to time the Company may enter into confidential discussions regarding the potential settlement of pending investigations or litigation. There are a variety of factors that influence the Company’s decisions to settle and the amount it may choose to pay, including the strength of the Company’s case, developments in the investigation or litigation, the behavior of other interested parties, the demand on management time and the possible distraction of the Company’s employees associated with the case and/or the possibility that the Company may be subject to an injunction or other equitable remedy. The settlement of any pending investigation, litigation or other proceedings could require the Company to make substantial settlement payments and result in its incurring substantial costs. Settlement Agreement On June 9, 2017, the Company and the U.S. Department of Justice (the DOJ) entered into a settlement agreement regarding four matters arising out of the activities of Skilled Healthcare Group, Inc. (Skilled) or Sun Healthcare Group, Inc. (Sun) prior to their operations becoming part of the Company’s operations (collectively, the Successor Matters). The four matters are: the Creekside Hospice Litigation, the Therapy Matters Investigation, the Staffing Matters Investigation and the SunDance Part B Therapy Matter (each as defined below). The Company has agreed to the settlement in order to resolve the allegations underlying the Successor Matters and to avoid the uncertainty and expense of litigation. The settlement agreement calls for payment of a collective settlement amount of $52.7 million (the Settlement Amount), including separate Medicaid repayment agreements with each affected state Medicaid program. The Company will remit the Settlement Amount over a period of five years. The remaining outstanding Settlement Amount at December 31, 2018 was $37.4 million, of which $11.8 million is recorded in accrued expenses and $25.6 million is recorded in other long-term liabilities. Creekside Hospice Litigation On August 2, 2013, the United States Attorney for the District of Nevada and the Civil Division of the DOJ informed Skilled that its Civil Division was investigating Skilled, as well as its then subsidiary, Creekside Hospice II, LLC, for possible violations of federal and state healthcare fraud and abuse laws and regulations (the Creekside Hospice Litigation). Those laws could have included the federal False Claims Act (FCA) and the Nevada False Claims Act (NFCA). The FCA provides for civil and administrative fines and penalties, plus treble damages. The NFCA provides for similar fines and penalties, including treble damages. Violations of those federal or state laws could also subject the Company and/or its subsidiaries to exclusion from participation in the Medicare and Medicaid programs. On or about August 6, 2014, in relation to the investigation the DOJ filed a notice of intervention in two pending qui tam proceedings filed by private party relators under the FCA and the NFCA and advised that it intended to take over the actions. The DOJ filed its complaint in intervention on November 25, 2014, against Creekside, Skilled, and Skilled Healthcare, LLC, asserting, among other things, that certain claims for hospice services provided by Creekside in the time period 2010 to 2013 did not meet Medicare requirements for reimbursement and were in violation of the civil False Claims Act. Therapy Matters Investigation In February 2015, representatives of the DOJ informed the Company that they were investigating the provision of therapy services at certain Skilled facilities from 2005 through 2013 and may pursue legal action against the Company and certain of its subsidiaries including Hallmark Rehabilitation GP, LLC for alleged violations of the federal and state healthcare fraud and abuse laws and regulations related to such services (the Therapy Matters Investigation). Those laws could have included the FCA and similar state laws. Staffing Matters Investigation In February 2015, representatives of the DOJ informed the Company that it intended to pursue legal action against the Company and certain of its subsidiaries related to staffing and certain quality of care allegations at certain Skilled facilities, related to the issues adjudicated against the Company and those subsidiaries in a previously disclosed class action lawsuit that Skilled settled in 2010 (the Staffing Matters Investigation). Those laws could have included the FCA and similar state laws. SunDance Part B Therapy Matter A subsidiary of Sun, SunDance Rehabilitation Corp. (SunDance), operated an outpatient agency licensed to provide Medicare Part B therapy services at assisted/senior living facilities in Georgia and was a party to a qui tam proceeding that was filed by a private party relator under the FCA. No SunDance agencies outside of Georgia were part of the qui tam proceeding. The Civil Division of the United States Attorney's Office for the District of Georgia filed a notice of intervention in this matter in March 2016 asserting that certain SunDance claims for therapy services did not meet Medicare requirements for reimbursement. Conditional Asset Retirement Obligations Certain of the Company’s leased and owned real estate assets contain asbestos. The asbestos is believed to be appropriately contained in accordance with environmental regulations. If these properties were demolished or subject to renovation activities that disturb the asbestos, certain environmental regulations are in place, which specify the manner in which the asbestos must be handled and disposed. At December 31, 2018 and 2017, the Company has a liability for the asset retirement obligation associated primarily with the cost of asbestos removal aggregating approximately $9.0 million and $9.8 million, respectively, which is included in other long-term liabilities. The liability for each facility will be accreted to its settlement value, which is estimated to approximate $19.8 million through the estimated settlement dates extending from 2019 through 2042. Due to the time over which these obligations could be settled and the judgment used to determine the liability, the ultimate obligation may differ from the estimate. Upon settlement, any difference between actual cost and the estimate is recognized as a gain or loss in that period. Annual accretion of the liability is recorded each year for the impacted assets until the obligation year is reached, either by sale of the property, demolition or some other future event such as a government action. Employment Agreements The Company has employment agreements and arrangements with its executive officers and certain members of management. The agreements generally continue until terminated by the executive or management, and provide for severance payments under certain circumstances. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | (23) The Company’s financial instruments consist primarily of cash and cash equivalents, restricted cash and equivalents, restricted 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. 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 measured at fair value on a recurring basis as of December 31, 2018 and 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 December 31, Identical Assets Observable Inputs Inputs Assets: 2018 (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ 20,865 $ 20,865 $ — $ — Restricted cash and equivalents 121,411 121,411 — — Restricted investments in marketable securities: Mortgage/government backed securities 11,819 — 11,819 — Corporate bonds 55,819 — 55,819 — Government bonds 68,515 40,699 27,816 — Total $ 278,429 $ 182,975 $ 95,454 $ — 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: Mortgage/government backed securities 7,848 — 7,848 — Corporate bonds 52,325 — 52,325 — Government bonds 65,943 30,457 35,486 — Total $ 184,754 $ 89,095 $ 95,659 $ — 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. Many of the Company’s financial instruments have quoted prices but are traded less frequently, instruments whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data, and instruments that are fairly valued using other financial instruments, the parameters of which can be directly observed. These financial instruments have been reported as Level 2 measurements. Debt Instruments The table below shows the carrying amounts and estimated fair values, net of debt issuance costs and other non-cash debt discounts and premiums, of the Company’s primary long-term debt instruments: December 31, 2018 December 31, 2017 Carrying Value Fair Value Carrying Value Fair Value Asset based lending facilities $ 419,289 $ 419,289 $ — $ — Revolving credit facilities — — 303,091 303,091 Term loan agreements 184,652 184,652 120,706 120,706 Real estate loans 307,690 307,690 281,039 281,039 HUD insured loans 181,762 180,950 263,827 250,768 Notes payable 81,398 81,398 68,122 68,122 Mortgages and other secured debt (recourse) 4,190 4,190 12,536 12,536 Mortgages and other secured debt (non-recourse) 26,483 26,483 27,978 27,978 $ 1,205,464 $ 1,204,652 $ 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 majority of the Company’s debt instruments contain variable rates that are based upon current market prices, or have been refinanced within the recent past. Consequently, management believes the carrying value of these debt instruments approximates fair value. 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 table presents the Company’s hierarchy for nonfinancial assets measured at fair value on a non-recurring basis (in thousands): Impairment Charges - Carrying Value Year ended December 31, 2018 December 31, 2018 Assets: Property and equipment, net $ 2,887,554 $ 104,997 Goodwill 85,642 — Intangible assets, net 119,082 3,538 Impairment Charges - Carrying Value Year ended December 31, 2017 December 31, 2017 Assets: Property and equipment, net $ 3,413,599 $ 191,375 Goodwill 85,642 351,470 Intangible assets, net 142,976 8,576 The fair value allocation related to the Company’s acquisitions and the fair value of tangible and intangible assets related to the Company’s impairment analysis are 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 impact 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. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events. | |
Subsequent Events | (24) Next Partnership On January 31, 2019, Welltower sold the real estate of 15 facilities to a real estate partnership (Partnership), of which the Company acquired a 46% ownership interest. The remaining interest is held by Next. The Company will continue to operate these facilities pursuant to a new lease with the Partnership. The Company also entered into a fixed price purchase option to acquire the real estate at a 10% premium above the original acquisition cost in 2026. The 15 facilities had been included in Welltower Master Lease and were subject to 2.0% annual rent escalators. Under the new lease, there are no rent escalators for the first five years. Seven additional facilities, historically subject to the Welltower Master Lease, were sold to a third party and no longer operated by the Company. These seven facilities, located in New Jersey and Ohio, had aggregate annual revenue of $72.7 million and annual pre-tax net loss of $4.2 million. As a result of the transaction, the Company estimates annual cash lease obligations will be reduced by approximately $2.9 million. The Company is currently assessing the impact the new Partnership, new lease arrangement, Welltower Master Lease amendments and divestiture of the seven facilities will have on its consolidated financial statements. Other Divestitures Through March 18, 2019, the Company divested three other skilled nursing facilities located in Ohio. All three facilities are subject to lease agreements and had aggregate annual revenue of approximately $25.3 million and annual pre-tax net loss of $3.3 million. The Company is currently assessing the impact the divestitures and lease amendments will have on its consolidated financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Estimates and Assumptions | Estimates and Assumptions The consolidated financial statements have been prepared in conformity with U.S. GAAP, which requires management to consolidate company financial information and make informed estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates in the Company’s consolidated financial statements relate to valuation of accounts receivable, self-insured liabilities, income taxes, long-lived assets and goodwill, and other contingencies. Actual results could differ from those estimates. |
Revenue Recognition | Revenue Recognition The Company adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (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 5 – “ Net Revenues and Accounts Receivable. ” |
Accounts Receivable | Accounts Receivable The Company’s accounts receivable are primarily comprised of amounts due from Medicare, Medicaid, private insurance, self-pay residents, other third-party payors and long-term care providers that utilize its rehabilitation therapy and other services. The Company evaluates the valuation of accounts receivable based on analysis of historical collection trends, as well as its understanding of the nature and collectibility of accounts based on their age and other factors. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments with original maturities of three months or less when purchased and therefore, approximate fair value. The Company’s available cash is held in accounts at commercial banking institutions. The Company currently has bank deposits with commercial banking institutions that exceed Federal Deposit Insurance Corporation insurance limits. |
Restricted Cash and Equivalents | Restricted Cash and Equivalents Restricted cash and equivalents includes cash and money market funds held by the Company’s wholly owned captive insurance subsidiary, which are substantially restricted to securing outstanding claims losses. Further, restricted cash and equivalents includes cash proceeds received under the ABL Credit Facilities that are pledged to cash collateralize letters of credit previously issued under the retired revolving credit facilities, as well as cash account balances subject to deposit account control agreements that were sprung under the ABL Credit Facilities resulting in the majority of the Company’s cash accounts reclassified as restricted. See Note 11 – “ Long-Term Debt – Asset Based Lending Facilities.” The restricted cash and equivalents balances at December 31, 2018 and 2017 were $121.4 million and $4.1 million, respectively. |
Restricted Investments in Marketable Securities | Restricted Investments in Marketable Securities Restricted investments in marketable securities primarily consist of fixed interest rate securities that are considered to be available-for-sale and accordingly are reported at fair value with unrealized gains and losses, net of related tax effects, included within accumulated other comprehensive loss, a separate component of stockholders’ deficit. Fair values for fixed interest rate securities are based on quoted market prices. A decline in the market value of any security below cost that is deemed other-than-temporary is charged to income, resulting in the establishment of a new cost basis for the security. Realized gains and losses for securities classified as available-for-sale are derived using the specific identification method for determining the cost of securities sold. The restricted investments in marketable securities balances at December 31, 2018 and 2017 were $136.2 million and $126.1 million, respectively. |
Property and Equipment | Property and Equipment Property and equipment are carried at cost less accumulated depreciation. Depreciation expense is calculated using the straight-line method over the estimated useful lives of the depreciable assets, which generally range from 20-35 years for buildings, building improvements and land improvements, and 3-15 years for equipment, furniture and fixtures. Depreciation expense on leasehold improvements and assets held under capital leases is calculated using the straight-line method over the lesser of the lease term or the estimated useful life of the asset. Expenditures for maintenance and repairs necessary to maintain property and equipment in efficient operating condition are expensed as incurred. Costs of additions and improvements are capitalized. Total depreciation expense for the years ended December 31, 2018 and 2017 was $210.0 million and $238.2 million, respectively. Impairment of Long-Lived Assets The Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount of an asset to the future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized to the extent the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or the fair value, less costs to sell. See Note 20 – “ Asset Impairment Charges .” |
Goodwill and Identifiable Intangible Assets | Goodwill and Identifiable Intangible Assets Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. The Company tests goodwill on an annual basis and between annual tests if events occur or circumstances exist that would reduce the fair value of a reporting unit below its carrying amount. The Company performs its annual goodwill impairment assessment for its reporting units as of September 30 of each year. The Company first assesses qualitative factors to determine whether it is necessary to perform quantitative goodwill impairment testing. If determined necessary, the Company applies the quantitative impairment test to identify and measure the amount of impairment, if any. See Note 10 – “ Goodwill and Identifiable Intangible Assets ” and Note 20 – “ Asset Impairment Charges .” Definite-lived intangible assets consist of management contracts, customer relationships and favorable leases. These assets are amortized in accordance with the authoritative guidance for intangible assets using the straight-line method over their estimated useful lives. These assets are tested for impairment consistent with the Company’s long-lived assets. Indefinite-lived intangible assets consist of trade names. The Company tests indefinite-lived intangible assets for impairment on an annual basis or more frequently if events occur or circumstances exist that would indicate that the carrying amount of the intangible asset may not be recoverable. See Note 10 – “ Goodwill and Identifiable Intangible Assets ” and Note 20 – “ Asset Impairment Charges .” |
Self-Insurance Reserves | Self-Insurance Reserves The Company provides for self-insurance reserves for both general and professional liability and workers’ compensation claims based on estimates of the ultimate costs for both reported claims and claims incurred but not reported. Estimated losses from asserted and incurred but not reported claims are accrued based on the Company’s estimates of the ultimate costs of the claims, which include costs associated with litigating or settling claims, and the relationship of past reported incidents to eventual claims payments. All relevant information, including the Company’s own historical experience, the nature and extent of existing asserted claims and reported incidents, and independent actuarial analyses of this information is used in estimating the expected amount of claims. The reserves for loss for workers’ compensation risks are discounted based on actuarial estimates of claim payment patterns whereas the reserves for general and professional liability are recorded on an undiscounted basis. The Company also considers amounts that may be recovered from excess insurance carriers in estimating the ultimate net liability for such risks. See Note 22 – “ Commitments and Contingencies – Loss Reserves For Certain Self-Insured Programs – General and Professional Liability and Workers’ Compensation .” |
Income Taxes | Income Taxes The Company’s effective tax rate is based on pretax income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which it operates. The Company accounts for income taxes in accordance with applicable guidance on accounting for income taxes, which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between book and tax bases on recorded assets and liabilities. Accounting guidance also requires that deferred tax assets be reduced by a valuation allowance, when it is more likely than not that a tax benefit will not be realized. The recognition and measurement of a tax position is based on management’s best judgment given the facts, circumstances and information available at the reporting date. The Company evaluates tax positions to determine whether the benefits of tax positions are more likely than not of being sustained upon audit based on the technical merits of the tax position. For tax positions that are more likely than not of being sustained upon audit, the Company recognizes the largest amount of the benefit that is greater than 50% likely of being realized upon ultimate settlement in the financial statements. For tax positions that are not more likely than not of being sustained upon audit, the Company does not recognize any portion of the benefit in the financial statements. If the more likely than not threshold is not met in the period for which a tax position is taken, the Company may subsequently recognize the benefit of that tax position if the tax matter is effectively settled, the statute of limitations expires, or if the more likely than not threshold is met in a subsequent period. The Company evaluates, on a quarterly basis, its ability to realize deferred tax assets by assessing its valuation allowance and by adjusting the amount of such allowance, if necessary. The factors used to assess the likelihood of realization are its forecast of pre-tax earnings, its forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. To the extent the Company prevails in matters for which reserves have been established, or are required to pay amounts in excess of its reserves, its effective tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement would require use of cash and result in an increase in the effective tax rate in the year of resolution. A favorable tax settlement would be recognized as a reduction in the Company’s effective tax rate in the year of resolution. The Company records accrued interest and penalties associated with uncertain tax positions as income tax expense in the consolidated statement of operations. |
Leases | Leases Leasing transactions are a material part of the Company’s business. The following discussion summarizes various aspects of the Company’s accounting for leasing transactions and the related balances. Capital Leases Lease arrangements are capitalized when such leases convey substantially all the risks and benefits incidental to ownership. Capital leases are amortized over either the lease term or the life of the related assets, depending upon available purchase options and lease renewal features. Amortization of capital lease obligations is included in the consolidated statements of operations within interest expense. Amortization of capital lease assets is included in the consolidated statements of operations within depreciation and amortization expense. See Note 12 – “ Lease and Lease Commitments .” Operating Leases For operating leases, minimum lease payments, including minimum scheduled rent increases, are recognized as lease expense on a straight-line basis over the applicable lease terms, including any periods during which the Company has use of the property but is not charged rent by a landlord. A majority of the Company’s leases, provide for rent escalations and renewal options. When the Company purchases businesses that have lease agreements accounted for as operating leases, it recognizes the fair value of the lease arrangements as either favorable or unfavorable and records these amounts as other identifiable intangible assets or other long-term liabilities, respectively. Favorable and unfavorable leases are amortized to lease expense on a straight-line basis over the remaining term of the leases. See Note 12 – “ Lease and Lease Commitments .” Sale/Leaseback Financing Obligation Prior to recognition as a sale, or profit/loss thereon, sale/leaseback transactions are evaluated to determine if their terms transfer all of the risks and rewards of ownership as demonstrated by the absence of any other continuing involvement by the seller-lessee. A sale/leaseback transaction that does not qualify for sale/leaseback accounting because of any form of continuing involvement by the seller-lessee is accounted for as a financing transaction. Under the financing method: (1) the assets and accumulated depreciation remain on the consolidated balance sheet and continue to be depreciated over the remaining useful lives; (2) no gain is recognized; and (3) proceeds received by the Company from these transactions are recorded as a financing obligation. See Note 13 – “ Financing Obligations .” |
Loss Per Share | Loss Per Share Loss per share is based upon the weighted average number of common shares outstanding during the respective periods. The Company follows the provisions of the authoritative guidance for determining whether instruments granted in share-based payment transactions are participating securities for purposes of calculating loss per common share. See Note 6 – “ Loss Per Share .” |
Stock-Based Compensation | Stock-Based Compensation The Company recognizes compensation expense related to stock-based compensation awards in accordance with the related authoritative guidance. See Note 15 – “ Stock-Based Compensation .” |
Recently Adopted 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, 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 5 – “ 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 adoption of ASU 2017-01 did not have a material impact on the Company’s 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 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 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 Act. Under the provisions of ASU 2018-05, the measurement period to determine reasonable tax positions regarding the provisions of the Tax Act cannot exceed 12 months from the enactment period of the legislation. The Tax Act was enacted on December 22, 2017. Management applied this guidance in the calculation of the Company's year ended December 31, 2017 tax provision. In the calculation of the Company's year ended December 31, 2018 tax provision, management calculated final determinations for the tax positions under the Tax Act that it previously made reasonable estimates within its year ended December 31, 2017 tax provision. |
Certain Significant Risks and_2
Certain Significant Risks and Uncertainties (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Certain Significant Risks and Uncertainties | |
Schedule of revenue by major source (in thousands) | Year ended December 31, 2018 2017 Medicare 21 % 23 % Medicaid 57 % 56 % Insurance 12 % 12 % Private 8 % 8 % Other 2 % 1 % Total 100 % 100 % |
Loss Per Share (Tables)
Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Loss Per Share | |
Schedule of reconciliation of the numerator and denominator used in the calculation of basic net loss per common share | Year ended December 31, 2018 2017 Numerator: Loss from continuing operations $ (372,417) $ (959,172) Less: Net loss attributable to noncontrolling interests (137,186) (380,222) Loss from continuing operations attributable to Genesis Healthcare, Inc. $ (235,231) $ (578,950) Loss from discontinued operations, net of taxes — (32) Net loss attributable to Genesis Healthcare, Inc. $ (235,231) $ (578,982) Denominator: Weighted-average shares outstanding for basic and diluted net loss per share 101,007 94,217 Basic and diluted net loss per common share: Loss from continuing operations attributable to Genesis Healthcare, Inc. $ (2.33) $ (6.15) Loss from discontinued operations, net of taxes — — Net loss attributable to Genesis Healthcare, Inc. $ (2.33) $ (6.15) |
Schedule of Anti-dilutive Securities (in thousands) | Year ended December 31, 2018 2017 Exchange of noncontrolling interests 60,144 61,973 Employee and director unvested restricted stock units 816 887 Stock warrants 1,395 25 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Information | |
Summary of Segmented Revenues (in thousands) | Year ended December 31, 2018 2017 Increase / (Decrease) Revenue Revenue Revenue Revenue Dollars Percentage Dollars Percentage Dollars Percentage Revenues: Inpatient services: Skilled nursing facilities $ 4,195,596 84.3 % $ 4,522,738 84.1 % $ (327,142) (7.2) % Assisted/Senior living facilities 95,571 1.9 % 96,109 1.8 % (538) (0.6) % Administration of third party facilities 8,733 0.2 % 8,991 0.2 % (258) (2.9) % Elimination of administrative services (3,027) — % (1,536) — % (1,491) 97.1 % Inpatient services, net 4,296,873 86.4 % 4,626,302 86.1 % (329,429) (7.1) % Rehabilitation therapy services: Total therapy services 889,069 17.9 % 983,370 18.3 % (94,301) (9.6) % Elimination intersegment rehabilitation therapy services (341,155) (6.9) % (379,764) (7.1) % 38,609 (10.2) % Third party rehabilitation therapy services 547,914 11.0 % 603,606 11.2 % (55,692) (9.2) % Other services: Total other services 161,038 3.2 % 166,098 3.1 % (5,060) (3.0) % Elimination intersegment other services (29,175) (0.6) % (22,266) (0.4) % (6,909) 31.0 % Third party other services 131,863 2.6 % 143,832 2.7 % (11,969) (8.3) % Net revenues $ 4,976,650 100.0 % $ 5,373,740 100.0 % $ (397,090) (7.4) % |
Summaries of Condensed Consolidated Statements of Operations, Total Assets and Goodwill (in thousands) | A summary of the Company’s condensed consolidated statement of operations follows (in thousands): Year ended December 31, 2018 Rehabilitation Inpatient Therapy Other Services Services Services Corporate Eliminations Consolidated Net revenues $ 4,299,900 $ 889,069 $ 160,913 $ 125 $ (373,357) $ 4,976,650 Salaries, wages and benefits 1,944,091 733,763 109,054 — — 2,786,908 Other operating expenses 1,740,537 51,590 61,110 — (373,357) 1,479,880 General and administrative costs — — — 149,182 — 149,182 Lease expense 127,323 — 1,289 1,247 — 129,859 Depreciation and amortization expense 193,930 12,779 684 13,503 — 220,896 Interest expense 367,562 55 36 96,085 — 463,738 Loss on early extinguishment of debt — — — 391 — 391 Investment income — — — (6,832) — (6,832) Other (income) loss (14,872) 1,942 78 (68) — (12,920) Transaction costs — — — 31,953 — 31,953 Long-lived asset impairments 104,997 — — — — 104,997 Goodwill and identifiable intangible asset impairments 3,538 — — — — 3,538 Equity in net (income) loss of unconsolidated affiliates — — — (1,608) 1,508 (100) (Loss) income before income tax benefit (167,206) 88,940 (11,338) (283,728) (1,508) (374,840) Income tax benefit — — — (2,423) — (2,423) (Loss) income from continuing operations $ (167,206) $ 88,940 $ (11,338) $ (281,305) $ (1,508) $ (372,417) Year ended December 31, 2017 Rehabilitation Inpatient Therapy Other Services Services Services Corporate Eliminations Consolidated Net revenues $ 4,627,838 $ 983,370 $ 165,598 $ 500 $ (403,566) $ 5,373,740 Salaries, wages and benefits 2,098,249 823,668 114,951 — — 3,036,868 Other operating expenses 1,850,101 87,915 48,663 — (403,565) 1,583,114 General and administrative costs — — — 167,718 — 167,718 Lease expense 144,554 — 1,211 1,760 — 147,525 Depreciation and amortization expense 223,443 14,711 675 16,957 — 255,786 Interest expense 415,162 56 37 84,127 — 499,382 Gain on early extinguishment of debt — — — (6,566) — (6,566) Investment income — — — (5,328) — (5,328) Other loss (income) 7,802 732 180 (241) — 8,473 Transaction costs — — — 14,325 — 14,325 Customer receivership and other related charges — 90,864 — — — 90,864 Long-lived asset impairments 189,494 1,881 — — — 191,375 Goodwill and identifiable intangible asset impairments 360,046 — — — — 360,046 Equity in net (income) loss of unconsolidated affiliates — — — (2,183) 1,940 (243) Loss before income tax expense (661,013) (36,457) (119) (270,069) (1,941) (969,599) Income tax benefit — — — (10,427) — (10,427) Loss from continuing operations $ (661,013) $ (36,457) $ (119) $ (259,642) $ (1,941) $ (959,172) The following table presents the segment assets as of December 31, 2018 compared to December 31, 2017 (in thousands): December 31, 2018 December 31, 2017 Inpatient services $ 3,735,778 $ 4,303,370 Rehabilitation therapy services 329,687 351,711 Other services 36,240 50,127 Corporate and eliminations 161,918 82,657 Total assets $ 4,263,623 $ 4,787,865 |
Restricted Investments in Mar_2
Restricted Investments in Marketable Securities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Restricted Investments in Marketable Securities | |
Schedule of Restricted Investments in Marketable Securities | Restricted investments in marketable securities at December 31, 2018 consist of the following (in thousands): Unrealized losses Amortized Unrealized Less than Greater than cost gains 12 months 12 months Fair value Restricted investments in marketable securities: Mortgage/government backed securities $ 11,945 $ 4 $ — $ (130) $ 11,819 Corporate bonds 56,199 49 (42) (387) 55,819 Government bonds 68,767 76 (2) (326) 68,515 $ 136,911 $ 129 $ (44) $ (843) 136,153 Less: Current portion of restricted investments (35,631) Long-term restricted investments $ 100,522 Restricted investments in marketable securities at December 31, 2017 consist of the following (in thousands): Unrealized losses Amortized Unrealized Less than Greater than cost gains 12 months 12 months Fair value Restricted investments in marketable securities: Mortgage/government backed securities $ 7,956 $ — $ — $ (108) $ 7,848 Corporate bonds 52,528 26 (106) (123) 52,325 Government bonds 65,842 509 (86) (322) 65,943 $ 126,326 $ 535 $ (192) $ (553) 126,116 Less: Current portion of restricted investments (33,015) Long-term restricted investments $ 93,101 |
Schedule of Maturities of Restricted Investments in Marketable Securities | Amortized Fair cost value Due in one year or less $ 42,833 $ 42,657 Due after 1 year through 5 years 91,078 90,480 Due after 5 years through 10 years — — Due after 10 years 3,000 3,016 $ 136,911 $ 136,153 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property and Equipment | |
Schedule of Property and Equipment (in thousands) | December 31, 2018 December 31, 2017 Land, buildings and improvements $ 469,575 $ 591,022 Capital lease land, buildings and improvements 693,546 752,657 Financing obligation land, buildings and improvements 2,274,211 2,525,551 Equipment, furniture and fixtures 417,684 453,230 Construction in progress 9,340 30,294 Gross property and equipment 3,864,356 4,352,754 Less: accumulated depreciation (976,802) (939,155) Net property and equipment $ 2,887,554 $ 3,413,599 |
Schedule of the impact of divestitures and impairments on property, plant and equipment | The impact of divestitures and impairments in the year ended December 31, 2018 by property and equipment line description is as follows: Divestitures Impairments Land, buildings and improvements $ (64,738) $ (40,942) Capital lease land, buildings and improvements (38,804) (11,782) Financing obligation land, buildings and improvements (211,143) (85,643) Equipment, furniture and fixtures (41,795) (3,843) Construction in progress (300) — Gross property and equipment (356,780) (142,210) Less: accumulated depreciation 108,287 37,213 Net property and equipment $ (248,493) $ (104,997) |
Goodwill and Identifiable Int_2
Goodwill and Identifiable Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Identifiable Intangible Assets | |
Schedule of Changes in Carrying Value of Goodwill (in thousands) | Inpatient Rehabilitation Therapy Services Other Services Consolidated Balance at January 1, 2017 $ 355,070 $ 73,814 $ 11,828 $ 440,712 Goodwill associated with divestitures (3,600) — — (3,600) Goodwill impairment charge (351,470) — — (351,470) 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 December 31, 2018 Goodwill 351,470 73,814 11,828 437,112 Accumulated impairment losses (351,470) — — (351,470) $ — $ 73,814 $ 11,828 $ 85,642 |
Schedule of identifiable intangible assets (in thousands) | December 31, 2018 Weighted Average Remaining Life (Years) Customer relationship assets, net of accumulated amortization of $65,756 $ 47,077 8 Favorable leases, net of accumulated amortization of $33,404 21,449 10 Trade names 50,556 Indefinite Identifiable intangible assets $ 119,082 December 31, 2017 Weighted Average Remaining Life (Years) Customer relationship assets, net of accumulated amortization of $55,285 $ 57,548 8 Favorable leases, net of accumulated amortization of $33,051 34,872 10 Trade names 50,556 Indefinite Identifiable intangible assets $ 142,976 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Long-Term Debt. | |
Schedule of Long-term Debt (in thousands) | December 31, 2018 December 31, 2017 Asset based lending facilities, net of debt issuance costs of $11,335 and $0 at December 31, 2018 and December 31, 2017, respectively $ 419,289 $ — Revolving credit facilities, net of debt issuance costs of $0 and $10,109 at December 31, 2018 and December 31, 2017, respectively — 303,091 Term loan agreements, net of debt issuance costs of $1,851 and $3,020 and debt premium balance of $8,446 and $0 at December 31, 2018 and December 31, 2017, respectively 184,652 120,706 Real estate loans, net of debt issuance costs of $5,360 and $3,486 and debt premium balance of $28,992 and $0 at December 31, 2018 and December 31, 2017, respectively 307,690 281,039 HUD insured loans, net of debt issuance costs of $5,247 and $5,590 and debt premium balance of $860 and $13,590 at December 31, 2018 and December 31, 2017, respectively 181,762 263,827 Notes payable 81,398 68,122 Mortgages and other secured debt (recourse) 4,190 12,536 Mortgages and other secured debt (non-recourse), net of debt issuance costs of $187 and $99 and debt premium balance of $1,520 and $1,618 at December 31, 2018 and December 31, 2017, respectively 26,483 27,978 1,205,464 1,077,299 Less: Current installments of long-term debt (122,531) (26,962) Long-term debt $ 1,082,933 $ 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 8.80 % Revolving credit facility (Non-HUD) 155,000 65,181 8.80 % Revolving credit facility (HUD) 45,000 10,444 8.80 % Delayed draw term loan facility 30,000 30,000 13.80 % $ 555,000 $ 430,625 9.15 % |
Schedule of Maturity of Total Debt (in thousands) | Twelve months ended December 31, 2019 $ 122,565 2020 245,716 2021 20,499 2022 208,220 2023 419,804 Thereafter 172,822 Total debt maturity $ 1,189,626 |
Leases and Lease Commitments (T
Leases and Lease Commitments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Leases and Lease Commitments | |
Schedule of Future Minimum Capital and Operating Lease Payments (in thousands) | Twelve months ended December 31, Capital Leases Operating Leases 2019 $ 88,793 $ 110,755 2020 89,397 109,391 2021 91,292 106,031 2022 93,281 84,003 2023 95,376 76,701 Thereafter 3,325,042 373,753 Total future minimum lease payments 3,783,181 $ 860,634 Less amount representing interest (2,813,068) Capital lease obligation 970,113 Less current portion (2,171) Long-term capital lease obligation $ 967,942 |
Financing Obligations (Tables)
Financing Obligations (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Financing Obligations | |
Schedule of Future Minimum Financing Lease Payments (in thousands) | Twelve months ended December 31, 2019 $ 237,335 2020 242,052 2021 245,311 2022 242,214 2023 247,852 Thereafter 6,661,624 Total future minimum lease payments 7,876,388 Less amount representing interest (5,141,448) Financing obligations $ 2,734,940 Less current portion (2,001) Long-term financing obligations $ 2,732,939 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Stock-Based Compensation | |
Schedule of PSU valuation assumptions | The Company’s Monte-Carlo fair value assumptions are as follows: December 31, 2018 December 31, 2017 Expected term, in years Risk-free interest rate Volatility Dividends N/A N/A |
Schedule of Nonvested Share Activity | Number of Restricted Stock Units Weighted-Average Grant Date Fair Value Non-vested balance at January 1, 2018 9,666 $ 1.99 Granted 5,718 2.43 Vested (2,651) 2.89 Forfeited (2,541) 2.43 Non-vested balance at December 31, 2018 10,192 $ 1.89 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Schedule of total income tax (benefit) expense by income category | Year ended December 31, 2018 2017 Continuing operations $ (2,423) $ (10,427) Discontinued operations — 48 Stockholder's deficit (115) (67) Total $ (2,538) $ (10,446) |
Schedule of Components of Income Tax Expense (Benefit) | Year ended December 31, 2018 2017 Current: Federal $ 1,064 $ 1,592 State (12) 157 1,052 1,749 Deferred: Federal (521) (12,304) State (2,954) 128 (3,475) (12,176) Total $ (2,423) $ (10,427) |
Schedule of Effective Income Tax Rate Reconciliation | Year ended December 31, 2018 2017 Computed “expected” benefit $ (78,716) $ (339,359) (Reduction) increase in income taxes resulting from: State and local income taxes, net of federal tax benefit 113 149 Income tax credits (2,397) (2,840) Goodwill impairment write-off — 53,688 Non-controlling interest 28,366 138,331 Adjustment to deferred taxes, including credits and valuation allowance 50,302 139,324 FIN 48 (38) (81) Other, net (53) 361 Total income tax benefit $ (2,423) $ (10,427) |
Schedule of Deferred Tax Assets and Liabilities | 2018 2017 Deferred tax assets: Investment in partnership 179,701 156,049 Net operating loss carryforwards 121,111 80,615 Discounted unpaid loss reserve 3,567 3,147 Deferred interest deduction 8,844 — Other intangible 6,550 3,542 General business credits 28,729 24,325 Total deferred tax assets 348,502 267,678 Valuation allowance (342,635) (264,098) Deferred tax assets, net of valuation allowance 5,867 3,580 Deferred tax liabilities: Long-lived assets: intangible property (6,281) (7,584) Total deferred tax liabilities (6,281) (7,584) Net deferred tax liabilities (414) (4,004) |
Schedule of Unrecognized Tax Benefits Roll Forward | Balance, December 31, 2016 $ 79 Additions based upon tax positions related to the current year 36 Balance, December 31, 2017 $ 115 Reductions due to lapses of applicable statute of limitations (38) Balance, December 31, 2018 $ 77 |
Other (Income) Loss (Tables)
Other (Income) Loss (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other (Income) Loss. | |
Summary of Net (Gain) Loss Recorded as Other (Income) Loss | Year ended December 31, 2018 2017 Gain on lease terminations and amendments - unamortized straight-lining, favorable and unfavorable lease balances $ (19,161) $ (8,144) Gain on lease terminations and amendments - unamortized financing lease and capital lease obligations (56,376) (807) Loss recognized for exit costs associated with divestiture of operations 21,459 12,940 Loss on a cease to use asset associated with a facility sublease 2,016 4,062 Loss on lease termination settlement 37,541 — Loss associated with lease extensions or newly leased operations, net 1,601 — Loss on sale of owned assets — 422 Total other (income) loss $ (12,920) $ 8,473 |
Assets Held for Sale (Tables)
Assets Held for Sale (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Assets held for sale. | |
Summary of Balance Sheet and Income Statement Information for Disposal Group (in thousands) | December 31, 2018 Current assets: Prepaid expenses $ 3,375 Long-term assets: Property and equipment, net of accumulated depreciation of $3,640 16,087 Total assets $ 19,462 Current liabilities: Current installments of long-term debt $ 639 Long-term liabilities: Long-term debt 25,942 Total liabilities $ 26,581 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value of Financial Instruments | |
Schedule of Fair Value of Assets Measured on a Recurring Basis (in thousands) | 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: 2018 (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ 20,865 $ 20,865 $ — $ — Restricted cash and equivalents 121,411 121,411 — — Restricted investments in marketable securities: Mortgage/government backed securities 11,819 — 11,819 — Corporate bonds 55,819 — 55,819 — Government bonds 68,515 40,699 27,816 — Total $ 278,429 $ 182,975 $ 95,454 $ — 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: Mortgage/government backed securities 7,848 — 7,848 — Corporate bonds 52,325 — 52,325 — Government bonds 65,943 30,457 35,486 — Total $ 184,754 $ 89,095 $ 95,659 $ — |
Schedule of Carrying Amounts and Estimated Fair Values of Long-term Debt Instruments (in thousands) | December 31, 2018 December 31, 2017 Carrying Value Fair Value Carrying Value Fair Value Asset based lending facilities $ 419,289 $ 419,289 $ — $ — Revolving credit facilities — — 303,091 303,091 Term loan agreements 184,652 184,652 120,706 120,706 Real estate loans 307,690 307,690 281,039 281,039 HUD insured loans 181,762 180,950 263,827 250,768 Notes payable 81,398 81,398 68,122 68,122 Mortgages and other secured debt (recourse) 4,190 4,190 12,536 12,536 Mortgages and other secured debt (non-recourse) 26,483 26,483 27,978 27,978 $ 1,205,464 $ 1,204,652 $ 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 Year ended December 31, 2018 December 31, 2018 Assets: Property and equipment, net $ 2,887,554 $ 104,997 Goodwill 85,642 — Intangible assets, net 119,082 3,538 Impairment Charges - Carrying Value Year ended December 31, 2017 December 31, 2017 Assets: Property and equipment, net $ 3,413,599 $ 191,375 Goodwill 85,642 351,470 Intangible assets, net 142,976 8,576 |
General Information (Details)
General Information (Details) | Mar. 06, 2018 | Dec. 31, 2018statefacility |
Financial Condition and Liquidity Considerations | ||
Number of non-strategic centers whose operations were exited during the period | 55 | |
Revenue | ||
Concentration risk | ||
Concentration risk (as a percent) | 100.00% | |
Rehabilitation therapy service | Revenue | ||
Concentration risk | ||
Concentration risk (as a percent) | 11.00% | |
Rehabilitation therapy service | Revenue | Product Concentration Risk | ||
Concentration risk | ||
Concentration risk (as a percent) | 11.00% | |
Inpatient Services | ||
Facility Count | ||
Number of skilled nursing, assisted/senior living and behavioral health centers through which inpatient services are provided | 425 | |
Number of states with facilities | state | 29 | |
Inpatient Services | Revenue | ||
Concentration risk | ||
Concentration risk (as a percent) | 86.40% | |
Inpatient Services | Revenue | Product Concentration Risk | ||
Concentration risk | ||
Concentration risk (as a percent) | 86.00% | |
ABL Credit Facilities | ||
Financial Condition and Liquidity Considerations | ||
Number of days prior to maturity of various loan agreements that the maturity of the credit facilities may be accelerated | 90 days |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Revenue recognition through Restricted Investments (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Restricted Cash and Investments in Marketable Securities | |||
Restricted cash and equivalents | $ 121,400 | $ 4,100 | |
Restricted investments in marketable securities | $ 136,200 | $ 126,100 | |
ASU 2014-09 | |||
Revenue recognition | |||
Cumulative effect on opening balance of accumulated deficit | $ 0 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - PP&E (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment | ||
Depreciation expense | $ 210 | $ 238.2 |
Buildings Building Improvements And Land Improvements [Member] | Minimum | ||
Property, Plant and Equipment | ||
Property and equipment, useful life | 20 years | |
Buildings Building Improvements And Land Improvements [Member] | Maximum | ||
Property, Plant and Equipment | ||
Property and equipment, useful life | 35 years | |
Equipment, furniture and fixtures | Minimum | ||
Property, Plant and Equipment | ||
Property and equipment, useful life | 3 years | |
Equipment, furniture and fixtures | Maximum | ||
Property, Plant and Equipment | ||
Property and equipment, useful life | 15 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - New accounting pronouncements (Details) - USD ($) $ in Thousands | Jan. 01, 2019 | Jan. 01, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Lease adjustments | ||||
Net impact of lease adjustments | $ (1,609,828) | $ (1,374,597) | ||
ASU 2014-09 | ||||
Revenue recognition | ||||
Cumulative effect on opening balance of accumulated deficit | $ 0 | |||
ASU 2016-02 | ||||
Lease adjustments | ||||
Practical expedients package adoption | true | |||
Derecognize financial obligation | $ 2,700,000 | |||
Derecognize existing property and equipment | 1,700,000 | |||
ASU 2016-02 | Existing lease facility | ||||
Lease adjustments | ||||
Operating lease liability | 600,000 | |||
Right of use asset | 500,000 | |||
Net impact of lease adjustments | 100,000 | |||
ASU 2016-02 | New lease facility | ||||
Lease adjustments | ||||
Operating lease liability | 1,900,000 | |||
Right of use asset | 1,900,000 | |||
Net impact of lease adjustments | $ (1,000,000) |
Certain Significant Risks and_3
Certain Significant Risks and Uncertainties - Revenue Sources (Details) - Revenue | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue Sources | ||
Concentration Risk, Percentage | 100.00% | |
Inpatient Services | ||
Revenue Sources | ||
Concentration Risk, Percentage | 86.40% | |
Government contracts | Inpatient Services | ||
Revenue Sources | ||
Concentration Risk, Percentage | 100.00% | 100.00% |
Government contracts | Medicare and Medicaid | Inpatient Services | ||
Revenue Sources | ||
Concentration Risk, Percentage | 78.00% | |
Government contracts | Medicare | Inpatient Services | ||
Revenue Sources | ||
Concentration Risk, Percentage | 21.00% | 23.00% |
Government contracts | Medicaid | Inpatient Services | ||
Revenue Sources | ||
Concentration Risk, Percentage | 57.00% | 56.00% |
Government contracts | Insurance | Inpatient Services | ||
Revenue Sources | ||
Concentration Risk, Percentage | 12.00% | 12.00% |
Government contracts | Private | Inpatient Services | ||
Revenue Sources | ||
Concentration Risk, Percentage | 8.00% | 8.00% |
Government contracts | Other | Inpatient Services | ||
Revenue Sources | ||
Concentration Risk, Percentage | 2.00% | 1.00% |
Certain Significant Risks and_4
Certain Significant Risks and Uncertainties - Concentration of Credit Risk (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Jul. 31, 2017statefacility | Dec. 31, 2018USD ($)customer | Dec. 31, 2017USD ($) | |
Concentration Risk | |||
Customer receivership and other related charges | $ 90,864 | ||
Loss from continuing operations | $ (372,417) | (959,172) | |
Rehabilitation Services | |||
Concentration Risk | |||
Number of large customers comprising over 50% of the net outstanding contract receivables | customer | 4 | ||
Related Party Customer | |||
Concentration Risk | |||
Gross accounts receivable converted to note receivable | $ 58,900 | ||
Reserves posted against note receivable | $ 55,000 | 55,000 | |
Related Party Customer | Rehabilitation Services | |||
Concentration Risk | |||
Customer receivership and other related charges | 55,000 | ||
Customer In Receivership | Rehabilitation Services | |||
Concentration Risk | |||
Customer receivership and other related charges | 35,600 | ||
Customer In Receivership | Rehabilitation therapy service | |||
Concentration Risk | |||
Number of nursing facilities operated by a customer | facility | 65 | ||
Number of states in which customer operated skilled nursing facilities at time of receivership filing | state | 6 | ||
Net revenues | 32,200 | ||
Loss from continuing operations | 4,600 | ||
Customer two in receivership | Rehabilitation therapy service | |||
Concentration Risk | |||
Customer receivership and other related charges | 300 | ||
Credit Concentration Risk [Member] | Accounts Receivable | Minimum | Rehabilitation Services | |||
Concentration Risk | |||
Number of distinct customers | customer | 180 | ||
Credit Concentration Risk [Member] | Group Of Largest Customers | Rehabilitation Services | |||
Concentration Risk | |||
Contract receivables, net | $ 55,800 | ||
Credit Concentration Risk [Member] | Group Of Largest Customers | Accounts Receivable | Rehabilitation Services | |||
Concentration Risk | |||
Concentration risk (as a percent) | 52.00% | ||
Credit Concentration Risk [Member] | Related Party Customer | Accounts Receivable | Rehabilitation Services | |||
Concentration Risk | |||
Concentration risk (as a percent) | 30.00% | ||
Contract receivables, net | $ 32,000 | ||
Gross contract receivables | $ 32,300 |
Significant Transactions and _2
Significant Transactions and Events - Restructuring Transactions (Details) $ / shares in Units, $ in Millions | Jan. 01, 2019 | Apr. 01, 2018 | Mar. 31, 2018 | Feb. 21, 2018USD ($)$ / sharesshares | Jan. 01, 2018USD ($)lease | Dec. 31, 2018$ / shares | Mar. 06, 2018 | 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 | |||||||
Omnibus Agreement [Abstract] | ||||||||
Exercise price of warrant | $ / shares | $ 1.33 | $ 1 | ||||||
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 | |||||||
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 and Omega Warrants | Omnibus Agreement | ||||||||
Omnibus Agreement [Abstract] | ||||||||
Exercise price of warrant | $ / shares | $ 1.33 | |||||||
Minimum | Welltower and Omega Warrants | ||||||||
Omnibus Agreement [Abstract] | ||||||||
Period from date of issuance that warrant may be exercised | 6 months | |||||||
Maximum | Term Loan Amendment | ||||||||
Omnibus Agreement [Abstract] | ||||||||
Paid-in-kind interest rate | 9.00% | |||||||
Maximum | Omnibus Agreement | Term Loan Amendment | ||||||||
Omnibus Agreement [Abstract] | ||||||||
Debt Instrument, Face Amount | $ 40 | |||||||
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 and Omega Warrants | ||||||||
Omnibus Agreement [Abstract] | ||||||||
Period from date of issuance that warrant may be exercised | 5 years | |||||||
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 - Divestiture of Non-Strategic Facilities (Details) $ in Thousands | Dec. 31, 2018USD ($)facility | Dec. 01, 2018USD ($)facility | Nov. 01, 2018USD ($)facility | Oct. 01, 2018USD ($)facility | Sep. 07, 2018USD ($)facility | Aug. 01, 2018USD ($)facility | Jul. 01, 2018USD ($)facility | Jun. 29, 2018USD ($)item | Jun. 13, 2018facility | Jun. 13, 2018USD ($)facility | Jun. 01, 2018USD ($)facility | May 04, 2018USD ($)facility | Apr. 01, 2018USD ($)facility | Feb. 28, 2018USD ($)facility | Dec. 22, 2017USD ($)facilityitem | Oct. 01, 2017USD ($)facility | Sep. 28, 2017USD ($)facility | Jul. 10, 2017USD ($)facility | Jun. 01, 2017USD ($)facility | Apr. 01, 2017USD ($)facility | Mar. 14, 2017USD ($)facility | Feb. 01, 2017USD ($)facility | Dec. 23, 2016facility | Nov. 01, 2016item | Dec. 31, 2018USD ($)facility | Dec. 31, 2018USD ($)facility | Dec. 31, 2017USD ($)facility | Mar. 31, 2018USD ($) | Dec. 31, 2016facility |
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number Of Facilities Sold | 28 | 64 | |||||||||||||||||||||||||||
Other Nonoperating Income (Expense) | $ 12,920 | $ (8,473) | |||||||||||||||||||||||||||
Divestiture exit costs | $ 1,900 | ||||||||||||||||||||||||||||
Gain on early extinguishment of debt | $ (391) | $ 6,566 | |||||||||||||||||||||||||||
Divestiture | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 55 | ||||||||||||||||||||||||||||
Number of facilities presented as assets held for sale | facility | 7 | 7 | 7 | ||||||||||||||||||||||||||
Disposed by sale | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 54 | 30 | |||||||||||||||||||||||||||
Number of skilled nursing facilities leased to third party operator | facility | 5 | ||||||||||||||||||||||||||||
Number Of Facilities Sold | facility | 23 | ||||||||||||||||||||||||||||
Disposed by sale | Assisted Senior Living Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 1 | ||||||||||||||||||||||||||||
Assets held for sale. | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Total assets | $ 19,462 | $ 19,462 | $ 19,462 | ||||||||||||||||||||||||||
Kansas, Missouri, Nebraska And Iowa | Disposed by sale | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 18 | ||||||||||||||||||||||||||||
Annual revenues | $ 110,100 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | (10,700) | ||||||||||||||||||||||||||||
Gain (loss) recognized in disposal group | $ (6,500) | ||||||||||||||||||||||||||||
Number of facilities presented as assets held for sale | facility | 16 | ||||||||||||||||||||||||||||
Number of owned facilities | facility | 16 | ||||||||||||||||||||||||||||
Loss associated with a cease use asset | $ 4,100 | ||||||||||||||||||||||||||||
Number of facilities subleased | facility | 1 | ||||||||||||||||||||||||||||
Number of facilities under lease | facility | 2 | ||||||||||||||||||||||||||||
Total assets | $ 91,600 | ||||||||||||||||||||||||||||
Cash proceeds | 80,000 | ||||||||||||||||||||||||||||
California | Disposed by sale | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 5 | ||||||||||||||||||||||||||||
Annual revenues | $ 4,000 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | 2,700 | ||||||||||||||||||||||||||||
Gain (loss) recognized in disposal group | $ 200 | ||||||||||||||||||||||||||||
California | Lease termination | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 1 | ||||||||||||||||||||||||||||
Annual revenues | $ 8,000 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | (1,600) | ||||||||||||||||||||||||||||
Gain (loss) recognized in disposal group | (900) | ||||||||||||||||||||||||||||
California | Lease termination | Behavioral Outpatient Clinic | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 1 | ||||||||||||||||||||||||||||
Annual revenues | $ 4,500 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | (500) | ||||||||||||||||||||||||||||
Gain (loss) recognized in disposal group | $ (200) | ||||||||||||||||||||||||||||
Georgia | Divestiture | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 1 | ||||||||||||||||||||||||||||
Annual revenues | $ 6,800 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | 200 | ||||||||||||||||||||||||||||
Gain (loss) recognized in disposal group | (500) | ||||||||||||||||||||||||||||
Annual rent credit | $ 300 | ||||||||||||||||||||||||||||
Georgia | Disposed by sale | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 2 | ||||||||||||||||||||||||||||
Annual revenues | $ 10,600 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | (400) | ||||||||||||||||||||||||||||
Gain (loss) recognized in disposal group | $ (700) | ||||||||||||||||||||||||||||
Texas | Disposed by sale | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Gain (loss) recognized in disposal group | $ 3,400 | ||||||||||||||||||||||||||||
Divestiture exit costs | $ 3,000 | ||||||||||||||||||||||||||||
Number of owned facilities | facility | 15 | ||||||||||||||||||||||||||||
Number of facilities under lease | facility | 1 | ||||||||||||||||||||||||||||
Cash proceeds | $ 89,400 | ||||||||||||||||||||||||||||
Gain on early extinguishment of debt | $ 9,400 | ||||||||||||||||||||||||||||
Texas | Lease termination | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number Of Facilities Sold | facility | 1 | ||||||||||||||||||||||||||||
Annual revenues | $ 8,200 | ||||||||||||||||||||||||||||
Pre-tax net income (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 divested or closed | facility | 7 | ||||||||||||||||||||||||||||
Divestiture exit costs | $ 1,600 | ||||||||||||||||||||||||||||
Sales price | $ 109,500 | ||||||||||||||||||||||||||||
North Carolina | Disposed by sale | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 1 | ||||||||||||||||||||||||||||
Annual revenues | $ 6,400 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | (1,000) | ||||||||||||||||||||||||||||
Gain (loss) recognized in disposal group | $ (500) | ||||||||||||||||||||||||||||
Idaho and Montana | Divestiture | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 4 | ||||||||||||||||||||||||||||
Annual revenues | $ 28,700 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | 3,100 | ||||||||||||||||||||||||||||
Gain (loss) on contract termination | 900 | ||||||||||||||||||||||||||||
Divestiture exit costs | 1,100 | ||||||||||||||||||||||||||||
NEVADA | Disposed by sale | Assisted Senior Living Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Annual revenues | 1,300 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | (200) | ||||||||||||||||||||||||||||
Gain (loss) recognized in disposal group | $ 0 | ||||||||||||||||||||||||||||
Number of owned facilities | facility | 1 | ||||||||||||||||||||||||||||
Cash proceeds | $ 1,900 | ||||||||||||||||||||||||||||
Sales price | $ 2,200 | ||||||||||||||||||||||||||||
Other (income) loss | Disposed by sale | Skilled Nursing Facilities And Assisted Senior Living Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Gain (loss) recognized in disposal group | $ 34,800 | ||||||||||||||||||||||||||||
Other (income) loss | Disposed by sale | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Gain (loss) recognized in disposal group | $ 16,200 | ||||||||||||||||||||||||||||
Sabra Master Leases | Disposed by sale | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 5 | ||||||||||||||||||||||||||||
Annual revenues | $ 28,500 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | $ (2,900) | ||||||||||||||||||||||||||||
Sabra Master Leases | Massachusetts Kentucky And California | Sale and lease termination | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 6 | ||||||||||||||||||||||||||||
Gain (loss) on contract termination | $ 2,100 | ||||||||||||||||||||||||||||
Divestiture exit costs | $ 1,500 | ||||||||||||||||||||||||||||
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 | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 1 | ||||||||||||||||||||||||||||
Annual revenues | $ 6,900 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | (1,600) | ||||||||||||||||||||||||||||
Gain (loss) recognized in disposal group | $ (100) | ||||||||||||||||||||||||||||
Sabra Master Leases | Georgia | Disposed by sale | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 2 | ||||||||||||||||||||||||||||
Annual revenues | $ 15,500 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | (3,000) | ||||||||||||||||||||||||||||
Gain (loss) recognized in disposal group | $ (1,800) | ||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
Sabra Master Leases | Tennessee | Disposed by sale | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Annual revenues | 7,400 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | 500 | ||||||||||||||||||||||||||||
Gain (loss) recognized in disposal group | $ (800) | ||||||||||||||||||||||||||||
Sabra Master Leases | Colorado | Disposed by sale | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 1 | ||||||||||||||||||||||||||||
Annual revenues | $ 5,700 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | (2,200) | ||||||||||||||||||||||||||||
Gain (loss) recognized in disposal group | $ (500) | ||||||||||||||||||||||||||||
Welltower Master Lease | Massachusetts | Disposed by sale | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 1 | ||||||||||||||||||||||||||||
Annual revenues | $ 9,000 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | 2,700 | ||||||||||||||||||||||||||||
Gain (loss) recognized in disposal group | $ 300 | ||||||||||||||||||||||||||||
Omega | Massachusetts | Sale and lease termination | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities previously divested and subleased | facility | 2 | ||||||||||||||||||||||||||||
Annual rent credit | $ 1,200 | ||||||||||||||||||||||||||||
Omega | Massachusetts | Disposed by sale | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 4 | ||||||||||||||||||||||||||||
Annual revenues | $ 26,700 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | 1,200 | ||||||||||||||||||||||||||||
Gain (loss) recognized in disposal group | (1,400) | ||||||||||||||||||||||||||||
Omega | Massachusetts | Lease termination | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Amount of capital lease net asset and obligation write-down | $ 14,900 | ||||||||||||||||||||||||||||
New Landlord Lease Agreement | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Initial lease term | 10 years | 10 years | |||||||||||||||||||||||||||
Period of extension of the renewal term of the master lease | 5 years | 5 years | |||||||||||||||||||||||||||
Number of lease renewal options | item | 1 | 1 | |||||||||||||||||||||||||||
Initial annual rent | $ 7,400 | $ 9,300 | |||||||||||||||||||||||||||
Sabra | Sale and lease termination | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Annual rent credit | $ 9,300 | ||||||||||||||||||||||||||||
Sabra | California | Sale and lease termination | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number Of Facilities Sold | facility | 1 | ||||||||||||||||||||||||||||
Sabra | Ohio | Sale and lease termination | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number Of Facilities Sold | facility | 1 | ||||||||||||||||||||||||||||
Annual revenues | $ 3,200 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | (800) | ||||||||||||||||||||||||||||
Annual rent credit | 600 | ||||||||||||||||||||||||||||
Divestiture exit costs | $ 100 | ||||||||||||||||||||||||||||
Second Spring Healthcare Investments | Sale and lease termination | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Accelerated depreciation expense on property and equipment released at lease termination | $ 5,300 | ||||||||||||||||||||||||||||
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 | 21,300 | ||||||||||||||||||||||||||||
Divestiture exit costs | $ 6,900 | ||||||||||||||||||||||||||||
Second Spring Healthcare Investments | Pennsylvania And New Jersey | Sale and lease termination | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number of facilities divested or closed | facility | 12 | ||||||||||||||||||||||||||||
Annual revenues | $ 146,200 | ||||||||||||||||||||||||||||
Pre-tax net income (loss) | $ (19,300) | ||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
Pre-tax net income (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 | Maryland and Indiana | Sale and lease termination | Skilled Nursing Facilities | |||||||||||||||||||||||||||||
Skilled Nursing Facility Divestitures | |||||||||||||||||||||||||||||
Number Of Facilities Sold | facility | 3 | ||||||||||||||||||||||||||||
Annual revenues | $ 40,100 | ||||||||||||||||||||||||||||
Pre-tax net income (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 |
Significant Transactions and _4
Significant Transactions and Events - Acquisitions (Details) $ in Millions | Nov. 01, 2018USD ($)facilityitem | Dec. 22, 2017USD ($) |
New Mexico And Arizona | ||
Acquisitions | ||
Number of facilities classified as capital leases | 4 | |
Number of facilities classified as operating leases | 5 | |
Capital lease assets and obligation | $ | $ 14.6 | |
Omega | ||
Acquisitions | ||
Capital lease assets and obligation | $ | $ 20.3 | |
Omega | Skilled Nursing Facilities And Assisted Senior Living Facilities | New Mexico And Arizona | ||
Acquisitions | ||
Number of operations acquired | 9 | |
Number of beds in facilities | item | 1,000 | |
Annual net revenue from acquired operations | $ | $ 60 | |
Omega | Skilled Nursing Facility | New Mexico | ||
Acquisitions | ||
Number of operations acquired | 8 | |
Omega | Assisted Senior Living Facilities | Arizona | ||
Acquisitions | ||
Number of operations acquired | 1 |
Significant Transactions and _5
Significant Transactions and Events - Lease Amendments and Terminations (Details) $ / shares in Units, $ in Thousands | Dec. 31, 2018USD ($)$ / shares | Dec. 21, 2018USD ($)facilityitem | Dec. 12, 2018USD ($)facilityitem | Jun. 29, 2018USD ($)statefacilityitem | Jun. 01, 2018USD ($)facility | Apr. 01, 2018USD ($)agreement | Jan. 01, 2018USD ($) | Dec. 22, 2017USD ($)facilityitem$ / sharesshares | Dec. 23, 2016facility | Nov. 01, 2016item | Dec. 31, 2018USD ($)facility$ / shares | Dec. 31, 2018USD ($)$ / shares | Dec. 31, 2017USD ($)$ / shares | Nov. 01, 2018USD ($) |
Lease Amendments and Terminations | ||||||||||||||
Net gains (losses) associated with master lease terminations and amendments | $ (37,541) | |||||||||||||
Exercise price of warrant | $ / shares | $ 1.33 | $ 1.33 | $ 1.33 | $ 1 | ||||||||||
Number of facilities sold | 28 | 64 | ||||||||||||
Number of lease agreements negotiated for extensions | agreement | 4 | |||||||||||||
Derecognition of certain lease assets | $ 1,900 | |||||||||||||
Losses recorded from leased facility divestiture | $ (2,000) | $ (2,016) | $ (4,062) | |||||||||||
Other income (loss) | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Net gains (losses) associated with master lease terminations and amendments | (21,900) | $ 7,700 | ||||||||||||
New Mexico And Arizona | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Capital lease assets and obligation | $ 14,600 | |||||||||||||
Omega | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Capital lease obligations | $ 10,000 | |||||||||||||
Capital lease annual interest rate | 9.00% | |||||||||||||
Extend term (in years) | 4 years | |||||||||||||
Number of shares that may be purchased under warrant | shares | 900,000 | |||||||||||||
Exercise price of warrant | $ / shares | $ 1 | |||||||||||||
Capital lease assets and obligation | $ 20,300 | |||||||||||||
Sabra Master Leases | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Permanent and unconditional annual cash rent savings | $ 19,000 | |||||||||||||
Number of facilities sold to third party landlords | facility | 54 | |||||||||||||
Non-cash lease termination charge | 34,100 | |||||||||||||
Sabra Master Leases | Other long-term liabilities | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Lease termination obligation | 34,100 | $ 34,100 | 34,100 | |||||||||||
Sabra Master Leases | Kentucky, Ohio and Indiana | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Number of facilities sold | facility | 20 | |||||||||||||
Sabra Master Leases | Lease termination | Kentucky, Ohio and Indiana | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Accelerated depreciation expense on property and equipment released at lease termination | $ 9,500 | |||||||||||||
Gain (loss) on contract termination | $ 7,700 | |||||||||||||
Sabra Master Leases | Lease termination | Skilled Nursing Facilities | Florida And New Hampshire | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Accelerated depreciation expense on property and equipment released at lease termination | $ 6,000 | |||||||||||||
Gain (loss) on contract termination | 7,000 | |||||||||||||
Annual rent credit | $ 12,000 | |||||||||||||
Sabra Master Leases | Lease termination | Skilled Nursing Facilities | Connecticut | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Accelerated depreciation expense on property and equipment released at lease termination | $ 2,800 | |||||||||||||
Gain (loss) on contract termination | 5,300 | |||||||||||||
Annual rent credit | $ 3,300 | |||||||||||||
Sabra Master Leases | Skilled Nursing Facilities And Assisted Senior Living Facilities | Lease termination | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Accelerated depreciation expense on property and equipment released at lease termination | $ 3,600 | |||||||||||||
Gain (loss) on contract termination | 2,900 | |||||||||||||
Annual rent credit | $ 7,400 | |||||||||||||
Sabra Master Leases | Skilled Nursing Facilities And Assisted Senior Living Facilities | Lease termination | New Mexico, Colorado and California | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Accelerated depreciation expense on property and equipment released at lease termination | $ 4,600 | |||||||||||||
Gain (loss) on contract termination | 900 | |||||||||||||
Annual rent credit | $ 3,400 | |||||||||||||
New Landlord Lease Agreement | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Initial lease term | 10 years | 10 years | ||||||||||||
Number of lease renewal options | item | 1 | 1 | ||||||||||||
Period of extension of the renewal term of the master lease | 5 years | 5 years | ||||||||||||
Initial annual rent | $ 7,400 | $ 9,300 | ||||||||||||
New Landlord Lease Agreement | New Mexico, Colorado and California | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Initial lease term | 9 years 6 months | |||||||||||||
Number of lease renewal options | item | 1 | |||||||||||||
Period of extension of the renewal term of the master lease | 5 years | |||||||||||||
Initial annual rent | $ 3,400 | |||||||||||||
New Landlord Lease Agreement | Connecticut | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Initial lease term | 10 years | |||||||||||||
Number of lease renewal options | item | 1 | |||||||||||||
Period of extension of the renewal term of the master lease | 5 years | |||||||||||||
Initial annual rent | $ 3,300 | |||||||||||||
Sabra | Sale and lease termination | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Annual rent credit | $ 9,300 | |||||||||||||
Sabra | Sale and lease termination | Skilled Nursing Facilities | Connecticut | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Number of facilities sold | facility | 9 | |||||||||||||
Sabra | Skilled Nursing Facilities And Assisted Senior Living Facilities | Sale and lease termination | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Number of states sold facilities are located | state | 7 | |||||||||||||
Sabra | Skilled Nursing Facility | Sale and lease termination | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Number of facilities sold | facility | 8 | |||||||||||||
Sabra | Skilled Nursing Facility | Sale and lease termination | Florida And New Hampshire | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Number of facilities sold | facility | 12 | |||||||||||||
Sabra | Skilled Nursing Facility | Sale and lease termination | New Mexico, Colorado and California | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Number of facilities sold | facility | 4 | |||||||||||||
Sabra | Assisted Or Senior Living Facility | Sale and lease termination | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Number of facilities sold | facility | 1 | |||||||||||||
Sabra | Sabra Master Leases | ||||||||||||||
Lease Amendments and Terminations | ||||||||||||||
Undiscounted lease termination obligation | $ 41,000 | $ 41,000 | $ 41,000 | |||||||||||
Lease termination obligation repayment period | 4 years |
Net Revenues and Accounts Rec_2
Net Revenues and Accounts Receivable - Adoption of ASC 606 (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Adoption of ASC 606 | ||
Operating expenses | $ 1,479,880 | $ 1,583,114 |
Contract liabilities | 0 | |
ASU 2014-09 | ||
Adoption of ASC 606 | ||
Portion of accounts receivable that was previously classified as allowance for doubtful accounts | $ 168,600 | |
Practical expedient | ||
Election of practical expedient regarding financing component | true | |
Impact of applying ASC 606 | ASU 2014-09 | ||
Adoption of ASC 606 | ||
Price concessions recorded as a direct reduction to net revenue | $ 95,800 | |
Operating expenses | 96,400 | |
Provision for losses on accounts receivable | 96,400 | |
Effect of reclassification on reported results of operations | $ 0 |
Net Revenues and Accounts Rec_3
Net Revenues and Accounts Receivable - Disaggregation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of revenue | ||
Total net revenues | $ 4,976,650 | $ 5,373,740 |
Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 5,373,740 | |
Inpatient Services | ||
Disaggregation of revenue | ||
Total net revenues | 4,296,873 | |
Inpatient Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 4,626,302 | |
Rehabilitation therapy service | ||
Disaggregation of revenue | ||
Total net revenues | 547,914 | |
Rehabilitation therapy service | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 603,606 | |
Other Services | ||
Disaggregation of revenue | ||
Total net revenues | 131,863 | |
Other Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 143,832 | |
Medicare | ||
Disaggregation of revenue | ||
Net revenues | 1,003,129 | |
Medicare | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 1,136,470 | |
Medicare | Inpatient Services | ||
Disaggregation of revenue | ||
Net revenues | 913,615 | |
Medicare | Inpatient Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 1,042,460 | |
Medicare | Rehabilitation therapy service | ||
Disaggregation of revenue | ||
Net revenues | 89,514 | |
Medicare | Rehabilitation therapy service | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 94,010 | |
Medicaid | ||
Disaggregation of revenue | ||
Net revenues | 2,463,324 | |
Medicaid | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 2,559,392 | |
Medicaid | Inpatient Services | ||
Disaggregation of revenue | ||
Net revenues | 2,461,228 | |
Medicaid | Inpatient Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 2,557,595 | |
Medicaid | Rehabilitation therapy service | ||
Disaggregation of revenue | ||
Net revenues | 2,096 | |
Medicaid | Rehabilitation therapy service | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 1,797 | |
Insurance | ||
Disaggregation of revenue | ||
Net revenues | 540,583 | |
Insurance | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 579,291 | |
Insurance | Inpatient Services | ||
Disaggregation of revenue | ||
Net revenues | 517,512 | |
Insurance | Inpatient Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 554,606 | |
Insurance | Rehabilitation therapy service | ||
Disaggregation of revenue | ||
Net revenues | 23,071 | |
Insurance | Rehabilitation therapy service | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 24,685 | |
Private | ||
Disaggregation of revenue | ||
Net revenues | 340,118 | |
Private | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 387,233 | |
Private | Inpatient Services | ||
Disaggregation of revenue | ||
Net revenues | 339,680 | |
Private | Inpatient Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 386,518 | |
Private | Rehabilitation therapy service | ||
Disaggregation of revenue | ||
Net revenues | 438 | |
Private | Rehabilitation therapy service | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 715 | |
Assisted living | Inpatient Services | ||
Disaggregation of revenue | ||
Total net revenues | 95,600 | 96,100 |
Third party providers | ||
Disaggregation of revenue | ||
Net revenues | 499,493 | |
Third party providers | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 559,698 | |
Third party providers | Rehabilitation therapy service | ||
Disaggregation of revenue | ||
Net revenues | 415,541 | |
Third party providers | Rehabilitation therapy service | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 466,260 | |
Third party providers | Other Services | ||
Disaggregation of revenue | ||
Net revenues | 83,952 | |
Third party providers | Other Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 93,438 | |
Other | ||
Disaggregation of revenue | ||
Net revenues | 130,003 | |
Other | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 151,656 | |
Other | Inpatient Services | ||
Disaggregation of revenue | ||
Net revenues | 64,838 | |
Other | Inpatient Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 85,123 | |
Other | Rehabilitation therapy service | ||
Disaggregation of revenue | ||
Net revenues | 17,254 | |
Other | Rehabilitation therapy service | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | 16,139 | |
Other | Other Services | ||
Disaggregation of revenue | ||
Net revenues | $ 47,911 | |
Other | Other Services | Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total net revenues | $ 50,394 |
Loss Per Share - Calculation of
Loss Per Share - Calculation of Basic (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018USD ($)class$ / sharesshares | Dec. 31, 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 | $ (372,417) | $ (959,172) |
Less: Net loss attributable to noncontrolling interests | (137,186) | (380,222) |
Loss from continuing operations attributable to Genesis Healthcare, Inc. | (235,231) | (578,950) |
Loss income from discontinued operations, net of taxes | (32) | |
Net loss attributable to Genesis Healthcare, Inc | $ (235,231) | $ (578,982) |
Denominator: | ||
Weighted-average shares outstanding for basic and diluted net loss per share | shares | 101,007 | 94,217 |
Basic and diluted net loss per common share: | ||
Loss from continuing operations attributable to Genesis Healthcare, Inc. | $ / shares | $ (2.33) | $ (6.15) |
Net loss attributable to Genesis Healthcare, Inc. | $ / shares | $ (2.33) | $ (6.15) |
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 | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Exercise price of warrant | $ 1.33 | $ 1 |
Noncontrolling interests | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares | 60,144,000 | 61,973,000 |
Stock Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares | 1,395,000 | 25,000 |
Class A Common Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of shares that may be purchased under warrant | 600,000 | 900,000 |
Class C Common Stock | Noncontrolling interests | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of units attributed to the noncontrolling interests outstanding | 59,700,801 | |
Employee And Non-employee Director | Restricted Stock Units (RSUs) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares | 816,000 | 887,000 |
Segment Information - Segment R
Segment Information - Segment Reporting (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($) | |
Segment Reporting Information | ||
Number of Reportable Segments | segment | 3 | |
Net revenues | $ 4,976,650 | $ 5,373,740 |
Increase (Decrease) in Net Revenue From Prior Period | $ (397,090) | |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (7.40%) | |
Salaries, wages and benefits | $ 2,786,908 | 3,036,868 |
Other operating expenses | 1,479,880 | 1,583,114 |
General and administrative costs | 149,182 | 167,718 |
Lease expense | 129,859 | 147,525 |
Depreciation and amortization expense | 220,896 | 255,786 |
Interest expense | 463,738 | 499,382 |
Loss (gain) on early extinguishment of debt | 391 | (6,566) |
Investment income | (6,832) | (5,328) |
Other (income) loss | (12,920) | 8,473 |
Transaction costs | 31,953 | 14,325 |
Customer receivership and other related charges | 90,864 | |
Long-lived asset impairments | 104,997 | 191,375 |
Goodwill and identifiable intangible asset impairments | 3,538 | 360,046 |
Equity in net (income) loss of unconsolidated affiliates | (100) | (243) |
Loss before income tax benefit | (374,840) | (969,599) |
Income tax benefit | (2,423) | (10,427) |
Loss from continuing operations | $ (372,417) | (959,172) |
Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 100.00% | |
Inpatient Services | ||
Segment Reporting Information | ||
Net revenues | $ 4,296,873 | |
Increase (Decrease) in Net Revenue From Prior Period | $ (329,429) | |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (7.10%) | |
Inpatient Services | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 86.40% | |
Inpatient Services | Product Concentration Risk | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 86.00% | |
Inpatient Services | Skilled Nursing Facilities | ||
Segment Reporting Information | ||
Net revenues | $ 4,195,596 | |
Increase (Decrease) in Net Revenue From Prior Period | $ (327,142) | |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (7.20%) | |
Inpatient Services | Skilled Nursing Facilities | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 84.30% | |
Inpatient Services | Assisted Senior Living Facilities | ||
Segment Reporting Information | ||
Net revenues | $ 95,571 | |
Increase (Decrease) in Net Revenue From Prior Period | $ (538) | |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (0.60%) | |
Inpatient Services | Assisted Senior Living Facilities | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 1.90% | |
Inpatient Services | Administration of third party facilities | ||
Segment Reporting Information | ||
Net revenues | $ 8,733 | |
Increase (Decrease) in Net Revenue From Prior Period | $ (258) | |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (2.90%) | |
Inpatient Services | Administration of third party facilities | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 0.20% | |
Rehabilitation therapy service | ||
Segment Reporting Information | ||
Net revenues | $ 547,914 | |
Increase (Decrease) in Net Revenue From Prior Period | $ (55,692) | |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (9.20%) | |
Rehabilitation therapy service | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 11.00% | |
Rehabilitation therapy service | Product Concentration Risk | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 11.00% | |
Rehabilitation therapy service | Therapy Services | ||
Segment Reporting Information | ||
Net revenues | $ 889,069 | |
Increase (Decrease) in Net Revenue From Prior Period | $ (94,301) | |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (9.60%) | |
Rehabilitation therapy service | Therapy Services | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 17.90% | |
Other Services | ||
Segment Reporting Information | ||
Net revenues | $ 131,863 | |
Increase (Decrease) in Net Revenue From Prior Period | $ (11,969) | |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (8.30%) | |
Other Services | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 2.60% | |
Other Services | Other Services | ||
Segment Reporting Information | ||
Net revenues | $ 161,038 | |
Increase (Decrease) in Net Revenue From Prior Period | $ (5,060) | |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (3.00%) | |
Other Services | Other Services | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 3.20% | |
Operating Segments | Inpatient Services | ||
Segment Reporting Information | ||
Net revenues | $ 4,299,900 | |
Salaries, wages and benefits | 1,944,091 | 2,098,249 |
Other operating expenses | 1,740,537 | 1,850,101 |
Lease expense | 127,323 | 144,554 |
Depreciation and amortization expense | 193,930 | 223,443 |
Interest expense | 367,562 | 415,162 |
Other (income) loss | (14,872) | 7,802 |
Long-lived asset impairments | 104,997 | 189,494 |
Goodwill and identifiable intangible asset impairments | 3,538 | 360,046 |
Loss before income tax benefit | (167,206) | (661,013) |
Loss from continuing operations | (167,206) | (661,013) |
Operating Segments | Rehabilitation therapy service | ||
Segment Reporting Information | ||
Net revenues | 889,069 | |
Salaries, wages and benefits | 733,763 | 823,668 |
Other operating expenses | 51,590 | 87,915 |
Depreciation and amortization expense | 12,779 | 14,711 |
Interest expense | 55 | 56 |
Other (income) loss | 1,942 | 732 |
Customer receivership and other related charges | 90,864 | |
Long-lived asset impairments | 1,881 | |
Loss before income tax benefit | 88,940 | (36,457) |
Loss from continuing operations | 88,940 | (36,457) |
Operating Segments | Other Services | ||
Segment Reporting Information | ||
Net revenues | 160,913 | |
Salaries, wages and benefits | 109,054 | 114,951 |
Other operating expenses | 61,110 | 48,663 |
Lease expense | 1,289 | 1,211 |
Depreciation and amortization expense | 684 | 675 |
Interest expense | 36 | 37 |
Other (income) loss | 78 | 180 |
Loss before income tax benefit | (11,338) | (119) |
Loss from continuing operations | (11,338) | (119) |
Corporate, Non-Segment | ||
Segment Reporting Information | ||
Net revenues | 125 | |
General and administrative costs | 149,182 | 167,718 |
Lease expense | 1,247 | 1,760 |
Depreciation and amortization expense | 13,503 | 16,957 |
Interest expense | 96,085 | 84,127 |
Loss (gain) on early extinguishment of debt | 391 | (6,566) |
Investment income | (6,832) | (5,328) |
Other (income) loss | (68) | (241) |
Transaction costs | 31,953 | 14,325 |
Equity in net (income) loss of unconsolidated affiliates | (1,608) | (2,183) |
Loss before income tax benefit | (283,728) | (270,069) |
Income tax benefit | (2,423) | (10,427) |
Loss from continuing operations | (281,305) | (259,642) |
Elimination | ||
Segment Reporting Information | ||
Net revenues | (373,357) | |
Other operating expenses | (373,357) | (403,565) |
Equity in net (income) loss of unconsolidated affiliates | 1,508 | 1,940 |
Loss before income tax benefit | (1,508) | (1,941) |
Loss from continuing operations | (1,508) | (1,941) |
Elimination | Inpatient Services | ||
Segment Reporting Information | ||
Net revenues | (3,027) | |
Increase (Decrease) in Net Revenue From Prior Period | $ (1,491) | |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | 97.10% | |
Elimination | Rehabilitation therapy service | ||
Segment Reporting Information | ||
Net revenues | $ (341,155) | |
Increase (Decrease) in Net Revenue From Prior Period | $ 38,609 | |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | (10.20%) | |
Elimination | Rehabilitation therapy service | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | (6.90%) | |
Elimination | Other Services | ||
Segment Reporting Information | ||
Net revenues | $ (29,175) | |
Increase (Decrease) in Net Revenue From Prior Period | $ (6,909) | |
Increase (Decrease) in Net Revenue as Percent of Prior Period Revenue | 31.00% | |
Elimination | Other Services | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | (0.60%) | |
Calculated under Revenue Guidance in Effect before Topic 606 | ||
Segment Reporting Information | ||
Net revenues | $ 5,373,740 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 100.00% | |
Calculated under Revenue Guidance in Effect before Topic 606 | Inpatient Services | ||
Segment Reporting Information | ||
Net revenues | $ 4,626,302 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Inpatient Services | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 86.10% | |
Calculated under Revenue Guidance in Effect before Topic 606 | Inpatient Services | Skilled Nursing Facilities | ||
Segment Reporting Information | ||
Net revenues | $ 4,522,738 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Inpatient Services | Skilled Nursing Facilities | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 84.10% | |
Calculated under Revenue Guidance in Effect before Topic 606 | Inpatient Services | Assisted Senior Living Facilities | ||
Segment Reporting Information | ||
Net revenues | $ 96,109 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Inpatient Services | Assisted Senior Living Facilities | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 1.80% | |
Calculated under Revenue Guidance in Effect before Topic 606 | Inpatient Services | Administration of third party facilities | ||
Segment Reporting Information | ||
Net revenues | $ 8,991 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Inpatient Services | Administration of third party facilities | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 0.20% | |
Calculated under Revenue Guidance in Effect before Topic 606 | Rehabilitation therapy service | ||
Segment Reporting Information | ||
Net revenues | $ 603,606 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Rehabilitation therapy service | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 11.20% | |
Calculated under Revenue Guidance in Effect before Topic 606 | Rehabilitation therapy service | Therapy Services | ||
Segment Reporting Information | ||
Net revenues | $ 983,370 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Rehabilitation therapy service | Therapy Services | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 18.30% | |
Calculated under Revenue Guidance in Effect before Topic 606 | Other Services | ||
Segment Reporting Information | ||
Net revenues | $ 143,832 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Other Services | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 2.70% | |
Calculated under Revenue Guidance in Effect before Topic 606 | Other Services | Other Services | ||
Segment Reporting Information | ||
Net revenues | $ 166,098 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Other Services | Other Services | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | 3.10% | |
Calculated under Revenue Guidance in Effect before Topic 606 | Operating Segments | Inpatient Services | ||
Segment Reporting Information | ||
Net revenues | $ 4,627,838 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Operating Segments | Rehabilitation therapy service | ||
Segment Reporting Information | ||
Net revenues | 983,370 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Operating Segments | Other Services | ||
Segment Reporting Information | ||
Net revenues | 165,598 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Corporate, Non-Segment | ||
Segment Reporting Information | ||
Net revenues | 500 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Elimination | ||
Segment Reporting Information | ||
Net revenues | (403,566) | |
Calculated under Revenue Guidance in Effect before Topic 606 | Elimination | Inpatient Services | ||
Segment Reporting Information | ||
Net revenues | (1,536) | |
Calculated under Revenue Guidance in Effect before Topic 606 | Elimination | Rehabilitation therapy service | ||
Segment Reporting Information | ||
Net revenues | $ (379,764) | |
Calculated under Revenue Guidance in Effect before Topic 606 | Elimination | Rehabilitation therapy service | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | (7.10%) | |
Calculated under Revenue Guidance in Effect before Topic 606 | Elimination | Other Services | ||
Segment Reporting Information | ||
Net revenues | $ (22,266) | |
Calculated under Revenue Guidance in Effect before Topic 606 | Elimination | Other Services | Revenue | ||
Segment Reporting Information | ||
Concentration Risk, Percentage | (0.40%) |
Segment Information - Assets an
Segment Information - Assets and Goodwill by Segment (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Segment Reporting, Asset Reconciling Item | ||
Segment total assets | $ 4,263,623 | $ 4,787,865 |
Corporate and Eliminations | ||
Segment Reporting, Asset Reconciling Item | ||
Segment total assets | 161,918 | 82,657 |
Inpatient Services | ||
Segment Reporting, Asset Reconciling Item | ||
Segment total assets | 3,735,778 | 4,303,370 |
Rehabilitation therapy service | ||
Segment Reporting, Asset Reconciling Item | ||
Segment total assets | 329,687 | 351,711 |
Other Services | ||
Segment Reporting, Asset Reconciling Item | ||
Segment total assets | $ 36,240 | $ 50,127 |
Restricted Investments in Mar_3
Restricted Investments in Marketable Securities - Components (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | $ 136,911 | $ 126,326 |
Unrealized gains | 129 | 535 |
Unrealized losses, less than 12 months | (44) | (192) |
Unrealized losses, greater than 12 months | (843) | (553) |
Total fair value | 136,153 | 126,116 |
Less: Current portion of restricted investments | (35,631) | (33,015) |
Long-term restricted investments | 100,522 | 93,101 |
Mortgage/Government Backed Securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 11,945 | 7,956 |
Unrealized gains | 4 | |
Unrealized losses, greater than 12 months | (130) | (108) |
Total fair value | 11,819 | 7,848 |
Corporate Bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 56,199 | 52,528 |
Unrealized gains | 49 | 26 |
Unrealized losses, less than 12 months | (42) | (106) |
Unrealized losses, greater than 12 months | (387) | (123) |
Total fair value | 55,819 | 52,325 |
Government Bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 68,767 | 65,842 |
Unrealized gains | 76 | 509 |
Unrealized losses, less than 12 months | (2) | (86) |
Unrealized losses, greater than 12 months | (326) | (322) |
Total fair value | $ 68,515 | $ 65,943 |
Restricted Investments in Mar_4
Restricted Investments in Marketable Securities (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Proceeds from maturities of restricted investments | $ 65.7 | $ 43.8 |
Proceeds from sales of investments | 3.5 | 26 |
Gross realized gain | 0.5 | |
Gross realized loss | $ (0.7) | |
Restricted cash pledged as security | 6.7 | |
Restricted investments pledged as security, amortized cost | 136.9 | |
Market value of restricted investments pledged as security | 136.2 | |
Letter of Credit | ||
Letters of credit issued | $ 127.4 |
Restricted Investments in Mar_5
Restricted Investments in Marketable Securities - Maturities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Restricted Investments in Marketable Securities | ||
Maturity term of investment grade government and corporate debt securities | 5 years | |
Restricted investments amortized cost maturity | ||
Amortized cost, Due in one year or less | $ 42,833 | |
Amortized cost, Due after 1 year through 5 years | 91,078 | |
Amortized cost, Due after 5 years through 10 years | ||
Amortized cost, Due after 10 years | 3,000 | |
Total amortized cost | 136,911 | $ 126,326 |
Restricted investments fair value maturity | ||
Fair value, Due in one year or less | 42,657 | |
Fair value, Due after 1 year through 5 years | 90,480 | |
Fair value, Due after 5 year through 10 years | ||
Fair value, Due after 10 years | 3,016 | |
Total fair value | $ 136,153 | $ 126,116 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | $ 3,864,356 | $ 4,352,754 |
Less accumulated depreciation | (976,802) | (939,155) |
Net property and equipment | 2,887,554 | 3,413,599 |
Land, Buildings and Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 469,575 | 591,022 |
Capital lease land, buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 693,546 | 752,657 |
Financing obligation land, buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 2,274,211 | 2,525,551 |
Equipment, furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 417,684 | 453,230 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | $ 9,340 | $ 30,294 |
Property and Equipment - Divest
Property and Equipment - Divestitures and Impairment (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($)facility | |
Lease amendments | |
Tangible Asset Impairment Charges | $ 105,000 |
Impact of Divestitures and Impairments | |
Gross impact of divestitures | (356,780) |
Less impact of divestiture on accumulated depreciation | 108,287 |
Net impact of divestitures | (248,493) |
Gross impact of impairments | (142,210) |
Less impact of impairments on accumulated depreciation | 37,213 |
Net impact of impairments | (104,997) |
Construction in progress | |
Reduction to construction in progress for property placed into service | $ (32,700) |
Divestiture | Skilled Nursing Facilities | |
Lease amendments | |
Number of facilities divested or closed | facility | 55 |
Write-offs | $ 248,500 |
Assets held for sale | |
Number of facilities presented as assets held for sale | facility | 7 |
Assets Reclassified From Property And Equipment To Assets Held For Sale | $ 16,100 |
Land, Buildings and Improvements | |
Impact of Divestitures and Impairments | |
Gross impact of divestitures | (64,738) |
Gross impact of impairments | (40,942) |
Capital lease land, buildings and improvements | |
Impact of Divestitures and Impairments | |
Gross impact of divestitures | (38,804) |
Gross impact of impairments | (11,782) |
Financing obligation land, buildings and improvements | |
Impact of Divestitures and Impairments | |
Gross impact of divestitures | (211,143) |
Gross impact of impairments | (85,643) |
Equipment, furniture and fixtures | |
Impact of Divestitures and Impairments | |
Gross impact of divestitures | (41,795) |
Gross impact of impairments | (3,843) |
Construction in progress | |
Impact of Divestitures and Impairments | |
Gross impact of divestitures | $ (300) |
Goodwill and Identifiable Int_3
Goodwill and Identifiable Intangible Assets - Changes in carrying value of goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | |
Goodwill [Line Items] | |||
Goodwill | $ 437,112 | $ 437,112 | $ 440,712 |
Goodwill associated with divestitures | (3,600) | ||
Goodwill impairment charge | (351,470) | ||
Accumulated impairment losses | (351,470) | (351,470) | |
Goodwill, net | 85,642 | 85,642 | |
Inpatient Services | |||
Goodwill [Line Items] | |||
Goodwill | 351,470 | 351,470 | 355,070 |
Goodwill associated with divestitures | (3,600) | ||
Goodwill impairment charge | (351,470) | ||
Accumulated impairment losses | (351,470) | (351,470) | |
Goodwill, net | |||
Rehabilitation therapy service | |||
Goodwill [Line Items] | |||
Goodwill | 73,814 | 73,814 | 73,814 |
Goodwill, net | 73,814 | 73,814 | |
Other Services | |||
Goodwill [Line Items] | |||
Goodwill | 11,828 | 11,828 | $ 11,828 |
Goodwill, net | $ 11,828 | $ 11,828 |
Goodwill and Identifiable Int_4
Goodwill and Identifiable Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Schedule of Finite and Indefinite-Lived Intangible Assets [Line Items] | ||
Identifiable intangible assets | $ 119,082 | $ 142,976 |
Accumulated amortization on intangible assets | 99,160 | 88,336 |
Trade names | ||
Schedule of Finite and Indefinite-Lived Intangible Assets [Line Items] | ||
Trade names | 50,556 | 50,556 |
Customer relationships, net | ||
Schedule of Finite and Indefinite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets | 47,077 | 57,548 |
Accumulated amortization on intangible assets | $ 65,756 | $ 55,285 |
Weighted Average Remaining Life | 8 years | 8 years |
Favorable lease contracts, net | ||
Schedule of Finite and Indefinite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets | $ 21,449 | $ 34,872 |
Accumulated amortization on intangible assets | $ 33,404 | $ 33,051 |
Weighted Average Remaining Life | 10 years | 10 years |
Goodwill and Identifiable Int_5
Goodwill and Identifiable Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity | ||
2019 | $ 15.3 | |
2020 | 9.9 | |
2021 | 9.1 | |
2022 | 5.9 | |
2023 | 5.4 | |
Thereafter | 22.9 | |
Impairment charges | 3.5 | $ 8.5 |
Customer relationships, net | ||
Finite-Lived Intangible Assets | ||
Amortization expense | 10.5 | 10.3 |
Management contracts | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity | ||
Impairment charges | 7.3 | |
Favorable lease contracts, net | ||
Finite-Lived Intangible Assets | ||
Amortization expense | 6.5 | 6.9 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity | ||
Impairment charges | $ 3.5 | $ 1.2 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Long-term debt | ||
Total long-term debt | $ 1,205,464 | $ 1,077,299 |
Current installments of long-term debt | (122,531) | (26,962) |
Long-term debt | 1,082,933 | 1,050,337 |
Term Loan | ||
Long-term debt | ||
Debt premium | 8,400 | |
ABL Credit Facilities | ||
Long-term debt | ||
Total long-term debt | 419,289 | |
Debt issuance costs | 11,335 | 0 |
New term loan agreement | ||
Long-term debt | ||
Total long-term debt | 184,652 | 120,706 |
Debt issuance costs | 1,851 | 3,020 |
Debt premium | 8,446 | 0 |
Real estate loans | ||
Long-term debt | ||
Total long-term debt | 307,690 | 281,039 |
Debt issuance costs | 5,360 | 3,486 |
Debt premium | 28,992 | 0 |
HUD insured loans | ||
Long-term debt | ||
Total long-term debt | 181,762 | 263,827 |
Debt issuance costs | 5,247 | 5,590 |
Debt premium | 860 | 13,590 |
Welltower Notes | ||
Long-term debt | ||
Total long-term debt | 81,398 | 68,122 |
Mortgages and other secured debt (recourse) | ||
Long-term debt | ||
Total long-term debt | 4,190 | 12,536 |
Mortgages and other secured debt (non-recourse) | ||
Long-term debt | ||
Total long-term debt | 26,483 | 27,978 |
Debt issuance costs | 187 | 99 |
Debt premium | 1,520 | 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 ($) | Dec. 31, 2018USD ($) | Dec. 31, 2020USD ($) | Mar. 05, 2018USD ($) | Dec. 31, 2017USD ($) |
Debt Instrument [Line Items] | |||||
Restricted Cash and Cash Equivalents | $ 121,400 | $ 4,100 | |||
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 | 47,600 | ||||
Commitment | 555,000 | ||||
Revolving credit facility borrowings | $ 430,625 | ||||
Weighted Average Interest Rate | 9.15% | ||||
Total borrowing base capacity | $ 436,900 | ||||
Available borrowing capacity under the ABL Credit Facilities | $ 6,300 | ||||
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 | ||||
Commitment | 325,000 | ||||
Revolving credit facility borrowings | $ 325,000 | ||||
Weighted Average Interest Rate | 8.80% | ||||
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] | |||||
Commitment | 155,000 | ||||
Revolving credit facility borrowings | $ 65,181 | ||||
Weighted Average Interest Rate | 8.80% | ||||
HUD Tranche | |||||
Debt Instrument [Line Items] | |||||
Commitment | $ 45,000 | ||||
Revolving credit facility borrowings | $ 10,444 | ||||
Weighted Average Interest Rate | 8.80% | ||||
Delayed Draw Term Loan Facility | |||||
Debt Instrument [Line Items] | |||||
Commitment fee rate (as percentage) | 2.00% | ||||
Commitment | $ 30,000 | ||||
Revolving credit facility borrowings | $ 30,000 | ||||
Weighted Average Interest Rate | 13.80% | ||||
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] | |||||
Commitment fee rate (as percentage) | 0.50% | ||||
Commitment | $ 525,000 | ||||
Revolving Credit Facility | Long Term Debt Current | ABL Credit Facilities | |||||
Debt Instrument [Line Items] | |||||
Revolving credit facility borrowings | $ 105,600 | ||||
Revolving Credit Facility | New Asset Based Lending Facilities | ABL Credit Facilities | |||||
Debt Instrument [Line Items] | |||||
Repayment in full of existing facility | $ 525,000 | ||||
Letter of Credit | |||||
Debt Instrument [Line Items] | |||||
Revolving credit facility borrowings | $ 127,400 |
Long-Term Debt - Revolving Cred
Long-Term Debt - Revolving Credit Facilities (Details) $ in Thousands | Mar. 05, 2018USD ($)item | Dec. 31, 2018USD ($) |
HUD Tranche | ||
Long-term debt | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 45,000 | |
Revolving Credit Facility | ||
Long-term debt | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 525,000 | |
Debt Instrument Number of Tranches | item | 2 | |
Revolving Credit Facility | Federal Funds | ||
Long-term debt | ||
Applicable margin | 3.00% | |
Revolving Credit Facility | Tranche A-1 | Base Rate | Minimum | ||
Long-term debt | ||
Applicable margin | 2.00% | |
Revolving Credit Facility | Tranche A-1 | Base Rate | Maximum | ||
Long-term debt | ||
Applicable margin | 2.50% | |
Revolving Credit Facility | Tranche A-1 | LIBOR | Minimum | ||
Long-term debt | ||
Applicable margin | 3.00% | |
Revolving Credit Facility | Tranche A-1 | LIBOR | Maximum | ||
Long-term debt | ||
Applicable margin | 3.50% | |
Revolving Credit Facility | HUD Tranche | Base Rate | Minimum | ||
Long-term debt | ||
Applicable margin | 2.00% | |
Revolving Credit Facility | HUD Tranche | Base Rate | Maximum | ||
Long-term debt | ||
Applicable margin | 2.50% | |
Revolving Credit Facility | HUD Tranche | LIBOR | Minimum | ||
Long-term debt | ||
Applicable margin | 2.50% | |
Revolving Credit Facility | HUD Tranche | LIBOR | Maximum | ||
Long-term debt | ||
Applicable margin | 3.00% |
Long-Term Debt - Term Loan Agre
Long-Term Debt - Term Loan Agreement (Details) $ in Millions | Jan. 01, 2020 | Mar. 05, 2018USD ($) | Dec. 31, 2018USD ($)item | Mar. 06, 2018USD ($) |
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 Loans and 2018 Term Loan | ||||
Term Loan Facility and New Term Loan Agreement | ||||
Outstanding principal balance under term loan facility | $ 178.1 | |||
Term Loan | ||||
Term Loan Facility and New Term Loan Agreement | ||||
Number of maintenance covenants | item | 4 | |||
Non-cash debt premium | $ 8.4 | |||
Term Loan | Minimum | Forecast | ||||
Term Loan Facility and New Term Loan Agreement | ||||
Leverage ratio | 1.80% | |||
Term Loan | Maximum | ||||
Term Loan Facility and New Term Loan Agreement | ||||
Leverage ratio | 1.70% | |||
2018 Term Loan | ||||
Term Loan Facility and New Term Loan Agreement | ||||
Aggregate principal amount | $ 40 | |||
Fixed interest rate | 10.00% | |||
2018 Term Loan | Minimum | ||||
Term Loan Facility and New Term Loan Agreement | ||||
Paid-in-kind interest rate | 5.00% | |||
Term Loan Amendment | ||||
Term Loan Facility and New Term Loan Agreement | ||||
Fixed interest rate | 14.00% | |||
Term Loan 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 | Term Loan | ||||
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 | Nov. 08, 2018USD ($)loan | Apr. 01, 2018USD ($) | Mar. 31, 2018USD ($) | Mar. 30, 2018USD ($)facilityloan | Apr. 01, 2016USD ($)facility | Nov. 01, 2018USD ($) | Dec. 31, 2018USD ($) | Mar. 06, 2018 | Feb. 15, 2018 | Dec. 31, 2017USD ($) |
Real estate loans | ||||||||||
Long-term debt | ||||||||||
Non-cash debt premium | $ 28,992 | $ 0 | ||||||||
Mid Cap Real Estate Loans | ||||||||||
Long-term debt | ||||||||||
Number of real estate loans | loan | 1 | 2 | ||||||||
Additional borrowings | $ 10,000 | |||||||||
Aggregate principal amount | $ 75,000 | |||||||||
Term of debt | 5 years | |||||||||
Amount drawn on loan | $ 73,000 | |||||||||
Number of facilities pledged | facility | 18 | |||||||||
Mid Cap Real Estate Loans | LIBOR | ||||||||||
Long-term debt | ||||||||||
Floor rate (as a percent) | 2.00% | 1.50% | ||||||||
Applicable margin | 5.85% | |||||||||
Mid Cap Real Estate Loans | 30-day LIBOR | ||||||||||
Long-term debt | ||||||||||
Floor rate (as a percent) | 2.00% | |||||||||
Applicable margin | 6.25% | |||||||||
Welltower Real Estate Loans | ||||||||||
Long-term debt | ||||||||||
Repayments of Debt | $ 69,700 | $ 15,700 | ||||||||
Aggregate principal balance | 201,100 | |||||||||
Non-cash debt premium | 29,000 | |||||||||
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% | |||||||||
Cash interest rate | 7.00% | |||||||||
Paid-in-kind interest rate | 5.00% | |||||||||
Loan repayments or commitments secured | $ 85,000 | |||||||||
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 Facility | ||||||||||
Long-term debt | ||||||||||
Number of facilities acquired | facility | 1 |
Long-Term Debt - HUD Insured Lo
Long-Term Debt - HUD Insured Loans (Details) $ in Thousands | Feb. 02, 2015 | Dec. 31, 2018USD ($)facilityloan | Dec. 31, 2017USD ($) |
HUD insured loans | |||
Long-term debt | |||
Principal balance outstanding | $ 213,800 | ||
Debt premium | $ 860 | $ 13,590 | |
Debt instrument average remaining term (in years) | 29 years | ||
Weighted Average Interest Rate | 3.40% | ||
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% | ||
HUD insured loans | Prepaid Expenses and Other Current Assets | |||
Long-term debt | |||
Escrow reserve funds | $ 19,600 | ||
Skilled Nursing Facility | |||
Long-term debt | |||
Number of facilities financed by HUD | facility | 1 | ||
Skilled Nursing Facility | HUD insured loans | |||
Long-term debt | |||
Number of debt instruments insured by HUD | loan | 25 | ||
Principal balance outstanding | $ 10,900 | ||
Debt premium | $ 3,800 | ||
Number Of Facilities Classified As Held For Sale | facility | 3 | ||
Skilled Nursing Facility | HUD insured loans | Assets held for sale. | |||
Long-term debt | |||
Principal balance outstanding | $ 26,600 | ||
Net debt issuance costs, debt premiums and escrow reserve funds | $ 3,400 |
Long-Term Debt - Notes Payable
Long-Term Debt - Notes Payable (Details) $ in Thousands, shares in Millions | Jan. 17, 2018USD ($) | Nov. 13, 2017USD ($)shares | Dec. 23, 2016USD ($)facilityitem | Nov. 01, 2016USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Long-term debt | |||||||
Number Of Facilities Sold | 28 | 64 | |||||
Gain on early extinguishment of debt | $ (391) | $ 6,566 | |||||
Short-term notes payable | |||||||
Long-term debt | |||||||
Debt converted | $ 19,600 | ||||||
Fixed interest rate | 5.75% | ||||||
Note outstanding balance | 7,800 | ||||||
Welltower note payable due October 30, 2020 | |||||||
Long-term debt | |||||||
Principal balance outstanding | $ 51,200 | $ 60,000 | |||||
Cash interest rate | 3.00% | ||||||
Paid-in-kind interest rate | 7.00% | ||||||
Welltower Notes Due December 2021 | |||||||
Long-term debt | |||||||
Notes Issued | $ 23,700 | ||||||
Number of notes issued | item | 2 | ||||||
Note Payable Due December 15 2021 | |||||||
Long-term debt | |||||||
Principal balance outstanding | $ 11,700 | $ 13,600 | |||||
Cash interest rate | 3.00% | ||||||
Paid-in-kind interest rate | 7.00% | ||||||
Convertible note payable due December 15, 2021 | |||||||
Long-term debt | |||||||
Number of shares issued in debt conversion | shares | 3 | ||||||
Gain on early extinguishment of debt | $ 8,900 |
Long-Term Debt - Other (Details
Long-Term Debt - Other (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018USD ($)loan | Nov. 08, 2018USD ($) | Mar. 31, 2018USD ($) | |
Mortgages and other secured debt (recourse) | |||
Long-term debt | |||
Weighted Average Interest Rate | 2.10% | ||
Amount of debt refinanced | $ 10 | ||
Mortgages and other secured debt (non-recourse) | |||
Long-term debt | |||
Weighted Average Interest Rate | 5.20% | ||
Debt premium available to offset non-recourse loans | $ 1.5 | ||
Number of debt instruments with a debt premium | loan | 1 | ||
Decrease to current maturities of long-term debt | $ (10.9) |
Long-Term Debt - Debt Covenants
Long-Term Debt - Debt Covenants (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Twelve months ended December 31, | |
2019 | $ 122,565 |
2020 | 245,716 |
2021 | 20,499 |
2022 | 208,220 |
2023 | 419,804 |
Thereafter | 172,822 |
Total long-term debt | $ 1,189,626 |
Lease and Lease Commitments - F
Lease and Lease Commitments - Future minimum payment tables (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||
2019 | $ 88,793 | |
2020 | 89,397 | |
2021 | 91,292 | |
2022 | 93,281 | |
2023 | 95,376 | |
Thereafter | 3,325,042 | |
Total future minimum lease payments | 3,783,181 | |
Less amount representing interest | (2,813,068) | |
Capital lease obligation | 970,113 | |
Less current portion | (2,171) | $ (2,511) |
Capital lease obligations | 967,942 | $ 1,025,355 |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||
2019 | 110,755 | |
2020 | 109,391 | |
2021 | 106,031 | |
2022 | 84,003 | |
2023 | 76,701 | |
Thereafter | 373,753 | |
Total future minimum lease payments | $ 860,634 | |
Capital Leases of Lessee [Abstract] | ||
Weighted average interest rate imputed on capital leases | 9.90% |
Lease and Lease Commitments - C
Lease and Lease Commitments - Capital Lease Rates and Deferred Balances (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2018USD ($)agreementleasefacility | Dec. 31, 2017USD ($) | |
Lease Covenants | ||
Number of leases with unmet financial covenants | lease | 4 | |
Number of facilities under leases with unmet financial covenants | facility | 12 | |
Identifiable Intangible Assets [Member] | ||
Deferred Lease Balances | ||
Net favorable leases | $ | $ 21.4 | $ 34.9 |
Other long-term liabilities | ||
Deferred Lease Balances | ||
Net unfavorable leases | $ | 5.3 | 15.5 |
Deferred straight-line rent balances included in other long-term liabilities | $ | $ 17.9 | $ 28.7 |
Welltower - CBYW | ||
Lease Covenants | ||
Number of master lease agreements | agreement | 2 | |
Number of facilities in the master lease agreement | facility | 28 | |
Number of leases with unmet financial covenants | agreement | 1 | |
Number of facilities under leases with unmet financial covenants | facility | 9 |
Financing Obligations (Details)
Financing Obligations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 06, 2018 | Dec. 31, 2017 | |
Sale Leaseback Transaction [Line Items] | |||
Financing obligation, imputed interest rate (as a percent) | 9.20% | ||
Present Value of Future Minimum Lease Payments, Sale Leaseback Transactions, Rolling Maturity | |||
Total future minimum lease payments | $ 7,876,388 | ||
Less amount representing interest | (5,141,448) | ||
Financing obligations | 2,734,940 | ||
Less current portion | (2,001) | $ (1,878) | |
Long-term financing obligations | 2,732,939 | $ 2,929,483 | |
Present Value of Future Minimum Lease Payments, Sale Leaseback Transactions, Fiscal Year Maturity | |||
2019 | 237,335 | ||
2020 | 242,052 | ||
2021 | 245,311 | ||
2022 | 242,214 | ||
2023 | 247,852 | ||
Thereafter | 6,661,624 | ||
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] | |||
Discount on financing obligation | $ 48,600 |
Stockholders_ Deficit (Details)
Stockholders’ Deficit (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Class of Stock | ||
Maximum number of shares from all classes combined, authorized | 1,200,000,000 | |
Preferred stock, authorized (in shares) | 30,000,000 | 30,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Distributions to stockholders and NCI | $ 0.4 | $ 0.4 |
Class A Common Stock | ||
Class of Stock | ||
Common stock, authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, issued (in shares) | 101,235,935 | 97,100,738 |
Class B Common Stock | ||
Class of Stock | ||
Common stock, authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, issued (in shares) | 744,396 | 744,396 |
Class C Common Stock | ||
Class of Stock | ||
Common stock, authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, issued (in shares) | 59,700,801 | 61,561,393 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Monte-Carlo fair value assumptions | ||
Expected term (in years) | 1 year 2 months 12 days | 1 year 2 months 12 days |
Risk-free interest rate (as a percent) | 1.50% | 1.50% |
Volatility (as a percent) | 65.00% | 65.00% |
2015 Plan | Class A Common Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Shares authorized (in shares) | 24,400,000 | |
Restricted Stock Units (RSUs) | 2015 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Award vesting period | 3 years | |
Restricted Stock Units (RSUs) | 2015 Plan | Class A Common Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of common stock shares per RSU or PSU vested | 1 |
Stock-Based Compensation - Nonv
Stock-Based Compensation - Nonvested Units Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Restricted Stock Units (RSUs) | ||
Number of Units | ||
Non-vested beginning balance | 9,666 | |
Granted | 5,718 | |
Vested | (2,651) | |
Forfeited | (2,541) | |
Non-vested ending balance | 10,192 | 9,666 |
Weighted-Average Grant Date Fair Value | ||
Non-vested beginning balance | $ 1.99 | |
Granted | 2.43 | $ 1.46 |
Vested | 2.89 | |
Forfeited | 2.43 | |
Non-vested ending balance | $ 1.89 | $ 1.99 |
Unrecognized compensation costs | $ 14.4 | |
Weighted average term expected to recognize stock-based compensation expense not yet recognized | 2 years | |
Fair value of shares vested | $ 5.8 | $ 3.4 |
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense | 4.8 | 3.1 |
Restricted Stock Units (RSUs) | General and Administrative Expense | ||
Weighted-Average Grant Date Fair Value | ||
Compensation expense | $ 8.8 | $ 8.4 |
Class A Common Stock | 2015 Plan | ||
Weighted-Average Grant Date Fair Value | ||
Shares available for grant (in shares) | 11,600 |
Income Taxes - Total Tax Provis
Income Taxes - Total Tax Provision (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Total income tax (benefit) expense | ||
Income tax benefit | $ (2,423) | $ (10,427) |
Discontinued operations | 48 | |
Members' equity | (115) | (67) |
Total | $ (2,538) | $ (10,446) |
FC-GEN Operations Investment, LLC | ||
Equity Method Investment, Ownership Percentage | 63.20% |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Provision (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Components of provision for income taxes | ||
Current: Federal | $ 1,064 | $ 1,592 |
Current: State | (12) | 157 |
Total current | 1,052 | 1,749 |
Deferred: Federal | (521) | (12,304) |
Deferred: State | (2,954) | 128 |
Total deferred | (3,475) | (12,176) |
Income tax (benefit) expense | $ (2,423) | $ (10,427) |
Income Taxes - Tax Cuts And Job
Income Taxes - Tax Cuts And Jobs Act (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Valuation allowance | ||
Valuation allowance | $ (342,635) | $ (264,098) |
Tax Cuts and Jobs Act | ||
Federal statutory income tax rate | 21.00% | 35.00% |
Federal | ||
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 - Reconciliation o
Income Taxes - Reconciliation of Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation | ||
Computed "expected" benefit | $ (78,716) | $ (339,359) |
State and local income taxes, net of federal tax benefit | 113 | 149 |
Income tax credits | (2,397) | (2,840) |
Goodwill impairment write-off | (53,688) | |
Non-controlling interest | 28,366 | 138,331 |
Adjustment to deferred taxes, including credits and valuation allowance | 50,302 | 139,324 |
FIN 48 | (38) | (81) |
Other, net | (53) | 361 |
Income tax (benefit) expense | $ (2,423) | $ (10,427) |
Effective tax rate | 0.60% | 1.10% |
Income Taxes - Deferred Income
Income Taxes - Deferred Income Taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Investment in partnership | $ 179,701 | $ 156,049 |
Net operating loss carryforwards | 121,111 | 80,615 |
Discounted unpaid loss reserve | 3,567 | 3,147 |
Deferred interest deduction | 8,844 | |
Other intangible | 6,550 | 3,542 |
General business credits | 28,729 | 24,325 |
Total deferred tax assets | 348,502 | 267,678 |
Valuation allowance | (342,635) | (264,098) |
Deferred tax assets, net of valuation allowance | 5,867 | 3,580 |
Deferred tax liabilities: | ||
Long-lived assets: intangible property | (6,281) | (7,584) |
Total deferred tax liabilities | (6,281) | (7,584) |
Net deferred tax liabilities | $ (414) | $ (4,004) |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns | ||
Balance at December 31, | $ 115 | $ 79 |
Reductions due to lapses of applicable statute of limitations | (38) | |
Additions based upon tax positions related to the current year | 36 | |
Balance at December 31, | $ 77 | 115 |
Tax savings payable, as a percent | 90.00% | |
Maximum | ||
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns | ||
Accrued interest related to unrecognized tax benefits | $ 100 | $ 100 |
State | Minimum | ||
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns | ||
Number of Open Tax Years | 3 years | |
State | Maximum | ||
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns | ||
Number of Open Tax Years | 6 years |
Income Taxes - Exchange Rights
Income Taxes - Exchange Rights and Tax Receivable Agreement (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill Tax Deductible Amount Tax Basis Step Up | $ 9.6 | $ 14.9 |
Tax Savings Payable to Former Owners, as a Percent | 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 | 2,287,987 |
Class A Common Stock | ||
Number of Class A shares issued in exchange for membership units and Class C shares | 1,860,912 | 2,288,381 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Millions | Jun. 01, 2018USD ($)facilityitem | Sep. 30, 2018item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Rehabilitation Services | |||||
Related Party Transaction | |||||
Net revenue from related party | $ 126.4 | $ 142.2 | |||
Net accounts receivable from related party | $ 32.3 | 32 | |||
FC Compassus LLC | Board of directors | |||||
Related Party Transaction | |||||
Aggregate ownership interest in counterparty indirectly held by certain board members, as a percent | 10.00% | ||||
FC Compassus LLC | Disposed by sale | Hospice And Home Health Operations | |||||
Related Party Transaction | |||||
Principal amount of notes receivable | $ 12 | ||||
Notes receivable from related party | $ 19 | ||||
Next Landlord Entities | |||||
Related Party Transaction | |||||
Initial annualized lease rent paid | $ 13 | ||||
Next Landlord Entities | Board of directors | |||||
Related Party Transaction | |||||
Ownership interest percentage | 4.00% | ||||
Next Landlord Entities | New Hampshire And Florida [Member] | |||||
Related Party Transaction | |||||
Number of facilities under lease and purchase option | facility | 12 | ||||
Number of LLCs affiliated with Next Healthcare | item | 12 | ||||
NSpire | |||||
Related Party Transaction | |||||
Net revenue from related party | $ 1.9 | ||||
Number of health care centers operated by related parties | item | 5 | ||||
Trident USA | Board of directors | Maximum | |||||
Related Party Transaction | |||||
Aggregate ownership interest in counterparty indirectly held by certain board members, as a percent | 10.00% | ||||
Trident USA | Mobile Radiology And Laboratory Diagnostic Services [Member] | |||||
Related Party Transaction | |||||
Amount of services in period | $ 12.6 | 11.8 | |||
Related Party Customer | |||||
Related Party Transaction | |||||
Reserves posted against note receivable | 55 | $ 55 | |||
Gross accounts receivable from related parties converted to notes receivable | $ 58.9 |
Defined Contribution Plan (Deta
Defined Contribution Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Defined Contribution Plan | ||
Defined contribution plan, employer discretionary contribution amount | $ 0 | $ 0 |
Other (Income) Loss (Details)
Other (Income) Loss (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Other (Income) Loss. | |||
Gain on lease terminations and amendments - unamortized straight-lining, favorable and unfavorable lease balances | $ (19,161) | $ (8,144) | |
Gain on lease terminations and amendments - unamortized financing lease and capital lease obligations | (56,376) | (807) | |
Loss recognized for exit costs associated with divestiture of operations | 21,459 | 12,940 | |
Loss on a cease-to-use asset associated with a facility sublease | $ 2,000 | 2,016 | 4,062 |
Loss on lease termination settlement | 37,541 | ||
Loss associated with lease extensions or newly leased operations, net | 1,601 | ||
Loss on sale of owned assets | 422 | ||
Total other (income) loss | $ (12,920) | $ 8,473 |
Asset Impairment Charges (Detai
Asset Impairment Charges (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Asset Impairment Charges | ||
Impairment charges | $ 3,500 | $ 8,500 |
Goodwill impairment associated with inpatient segment | 351,470 | |
Inpatient Services | ||
Asset Impairment Charges | ||
Impairment of Long-Lived Assets Held-for-use | 105,000 | 191,400 |
Goodwill impairment associated with inpatient segment | 351,470 | |
Inpatient Services | Goodwill And Intangible Asset Impairments [Member] | ||
Asset Impairment Charges | ||
Goodwill impairment associated with inpatient segment | 351,500 | |
Trade names | ||
Asset Impairment Charges | ||
Impairment of indefinite-lived intangible assets | 0 | 0 |
Management contracts | ||
Asset Impairment Charges | ||
Impairment charges | 7,300 | |
Management contracts | Goodwill And Intangible Asset Impairments [Member] | ||
Asset Impairment Charges | ||
Impairment charges | 7,300 | |
Favorable Leases | Goodwill And Intangible Asset Impairments [Member] | ||
Asset Impairment Charges | ||
Impairment charges on favorable lease intangible assets with a definite useful life | $ 3,500 | $ 1,200 |
Assets Held for Sale (Details)
Assets Held for Sale (Details) $ in Thousands | Oct. 01, 2018facility | Dec. 23, 2016facility | Nov. 01, 2016item | Jan. 31, 2019facility | Dec. 31, 2018USD ($)facility | Mar. 31, 2018USD ($)facility |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Number of facilities sold | 28 | 64 | ||||
Assets held for sale. | ||||||
Assets and Liabilities of Disposal Group | ||||||
Prepaid expenses | $ | $ 3,375 | |||||
Property and equipment, net of accumulated depreciation of $3,640 | $ | 16,087 | |||||
Accumulated depreciation | $ | 3,640 | |||||
Total Assets | $ | 19,462 | |||||
Current installments of long-term debt | $ | 639 | |||||
Long-term debt | $ | 25,942 | |||||
Total Liabilities | $ | $ 26,581 | |||||
Skilled Nursing Facilities | Disposed by sale | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Number of facilities sold | 23 | |||||
Skilled Nursing Facilities | Disposed by sale | Forecast | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Number of facilities sold | 7 | |||||
Skilled Nursing Facilities | 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 | 16 | |||||
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 | 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 | 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 | 9 | |||||
Texas | Skilled Nursing Facilities | Disposed by sale | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Number of owned facilities | 15 | |||||
Number of facilities under lease | 1 | |||||
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 classified as held for sale | 23 | |||||
Sales consideration amount | $ | $ 109,500 |
Commitments and Contingencies -
Commitments and Contingencies - Self Insurance Risks (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Commitments and Contingencies | ||
Workers' Compensation discount rate (as a percentage) | 2.90% | |
Potential effect of discounting on Workers Compensation reserve | $ 8.3 | $ 6.7 |
Provision for general and professional liability | 102.5 | 134 |
Reserve for general and professional liability | 435.3 | 442.9 |
Provision for workers' compensation | 49.9 | 54.1 |
Reserve for workers' compensation risks | 168.3 | 174.6 |
Health insurance reserve | $ 16.6 | $ 17.5 |
Commitments and Contingencies_2
Commitments and Contingencies - Litigation (Details) $ in Millions | Aug. 06, 2014item | Jul. 31, 2016item | Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($) |
Loss Contingencies | ||||
Number of matters under agreement in principle | item | 4 | |||
Accrued expenses | ||||
Loss Contingencies | ||||
Litigation settlement amount | $ 52.7 | |||
Environmental Remediation at Leased Sites [Member] | ||||
Loss Contingencies | ||||
Estimated settlement value | $ 19.8 | |||
Environmental Remediation at Leased Sites [Member] | Other long-term liabilities | ||||
Loss Contingencies | ||||
Asset Retirement Obligation | $ 9 | $ 9.8 | ||
Creekside Hospice Investigation | ||||
Loss Contingencies | ||||
Number of Qui Tam proceedings | item | 2 | |||
Creekside Hospice Therapy Matters Investigation Staffing Matters Investigation And Sundance Part B Therapy Matter (Member) | ||||
Loss Contingencies | ||||
Loss contingency settlement term | 5 years | |||
Accrued contingent liability | $ 37.4 | |||
Creekside Hospice Therapy Matters Investigation Staffing Matters Investigation And Sundance Part B Therapy Matter (Member) | Other long-term liabilities | ||||
Loss Contingencies | ||||
Accrued contingent liability | 25.6 | |||
Creekside Hospice Therapy Matters Investigation Staffing Matters Investigation And Sundance Part B Therapy Matter (Member) | Accrued expenses | ||||
Loss Contingencies | ||||
Accrued contingent liability | $ 11.8 | |||
SunDance Part B Therapy Matter | ||||
Loss Contingencies | ||||
Number of subsidiary agencies outside of Georgia that are part of the Qui Tam proceeding | item | 0 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Recurring measures (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | $ 20,865 | $ 54,525 |
Restricted cash and equivalents | 121,411 | 4,113 |
Assets, Fair Value Disclosure, Total | 278,429 | 184,754 |
Mortgage/Government Backed Securities | ||
Assets, Fair Value Disclosure [Abstract] | ||
Restricted investments in marketable securities | 11,819 | 7,848 |
Corporate Bond Securities [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Restricted investments in marketable securities | 55,819 | 52,325 |
Government Bonds | ||
Assets, Fair Value Disclosure [Abstract] | ||
Restricted investments in marketable securities | 68,515 | 65,943 |
Level 1 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | 20,865 | 54,525 |
Restricted cash and equivalents | 121,411 | 4,113 |
Assets, Fair Value Disclosure, Total | 182,975 | 89,095 |
Level 1 | Government Bonds | ||
Assets, Fair Value Disclosure [Abstract] | ||
Restricted investments in marketable securities | 40,699 | 30,457 |
Level 2 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure, Total | 95,454 | 95,659 |
Level 2 | Mortgage/Government Backed Securities | ||
Assets, Fair Value Disclosure [Abstract] | ||
Restricted investments in marketable securities | 11,819 | 7,848 |
Level 2 | Corporate Bond Securities [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Restricted investments in marketable securities | 55,819 | 52,325 |
Level 2 | Government Bonds | ||
Assets, Fair Value Disclosure [Abstract] | ||
Restricted investments in marketable securities | $ 27,816 | $ 35,486 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Debt Instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Principal balance outstanding, net | $ 1,205,464 | $ 1,077,299 |
Asset based lending facilities | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Principal balance outstanding, net | 419,289 | |
New term loan agreement | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Principal balance outstanding, net | 184,652 | 120,706 |
Real estate loans | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Principal balance outstanding, net | 307,690 | 281,039 |
HUD insured loans | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Principal balance outstanding, net | 181,762 | 263,827 |
Welltower Notes | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Principal balance outstanding, net | 81,398 | 68,122 |
Mortgages and other secured debt (recourse) | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Principal balance outstanding, net | 4,190 | 12,536 |
Mortgages and other secured debt (non-recourse) | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Principal balance outstanding, net | 26,483 | 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 | 1,204,652 | 1,064,240 |
Level 2 | Asset based lending facilities | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 419,289 | |
Level 2 | New term loan agreement | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 184,652 | 120,706 |
Level 2 | Real estate loans | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 307,690 | 281,039 |
Level 2 | HUD insured loans | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 180,950 | 250,768 |
Level 2 | Welltower Notes | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 81,398 | 68,122 |
Level 2 | Mortgages and other secured debt (recourse) | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | 4,190 | 12,536 |
Level 2 | Mortgages and other secured debt (non-recourse) | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Fair Value | $ 26,483 | 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 | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Non-recurring Fair Value Measures | ||
Property and equipment, Impairment Charges | $ 105,000 | |
Goodwill, Impairment Loss | $ 351,470 | |
Fair Value, Measurements, Nonrecurring [Member] | ||
Non-recurring Fair Value Measures | ||
Property and equipment, net | 2,887,554 | 3,413,599 |
Property and equipment, Impairment Charges | 104,997 | 191,375 |
Goodwill | 85,642 | 85,642 |
Goodwill, Impairment Loss | 351,470 | |
Intangible assets | 119,082 | 142,976 |
Intangible assets, Impairment Loss | $ 3,538 | $ 8,576 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | Jan. 31, 2019facility | Dec. 23, 2016facility | Nov. 01, 2016item | Jan. 31, 2019 | Mar. 18, 2019USD ($)facility | Dec. 31, 2018USD ($) | Feb. 28, 2019USD ($) |
Subsequent Event [Line Items] | |||||||
Number of facilities sold | 28 | 64 | |||||
Subsequent Events | |||||||
Subsequent Event [Line Items] | |||||||
Reduction to annual cash lease obligations | $ 2.9 | ||||||
New Jersey And Ohio | Facilities No Longer Operated | |||||||
Subsequent Event [Line Items] | |||||||
Annual revenues | $ 72.7 | ||||||
Pre-tax net income (loss) | $ 4.2 | ||||||
New Jersey And Ohio | Subsequent Events | Facilities No Longer Operated | |||||||
Subsequent Event [Line Items] | |||||||
Number of facilities sold to third party and no longer operated by Company | facility | 7 | ||||||
Ohio | Subsequent Events | Skilled Nursing Facility | |||||||
Subsequent Event [Line Items] | |||||||
Number Of Facilities Divested Or Closed | facility | 3 | ||||||
Annual revenues | $ 25.3 | ||||||
Pre-tax net income (loss) | $ 3.3 | ||||||
Welltower Master Lease | Subsequent Events | Skilled Nursing Facility | |||||||
Subsequent Event [Line Items] | |||||||
Number of facilities previously included in master lease agreement with Welltower | facility | 15 | ||||||
Annual Escalators (as a percent) | 2.00% | ||||||
Next Joint Venture Lease Agreement [Member] | Subsequent Events | Skilled Nursing Facility | |||||||
Subsequent Event [Line Items] | |||||||
Rent escalators for the first five years (as a percent) | 0.00% | ||||||
Next Joint Venture | Subsequent Events | |||||||
Subsequent Event [Line Items] | |||||||
Fixed price purchase option premium percentage | 10.00% | 10.00% | |||||
Next Joint Venture | Welltower | Subsequent Events | Skilled Nursing Facility | |||||||
Subsequent Event [Line Items] | |||||||
Number of facilities sold | facility | 15 | ||||||
Next Joint Venture | Next Joint Venture | Subsequent Events | Skilled Nursing Facility | |||||||
Subsequent Event [Line Items] | |||||||
Ownership interest in joint venture properties | 46.00% |