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After years of downsizing, particularly in Pennsylvania and New Jersey, Kennett Square-based Genesis Healthcare Inc. plans to add 34 nursing homes in Pennsylvania to the 15 it currently serves the State.
Genesis, which is now controlled by a New York investment firm and has new senior management, will acquire the Colorado facilities plus four from ProMedica Senior Care, said Lori Mayer, a spokeswoman for Genesis.
The change of course at Genesis — which has shrunk by a third from 2015 to last year — comes as a result of a decision by Welltower Inc., a large nursing home landlord, to switch operators of 147 nursing homes operated by ProMedica.
ProMedica has suffered enormous financial losses from its nursing homes over the past two years, including $316 million in the first nine months of 2022.
Welltower said nursing homes where it replaced ProMedica for two years have gotten better, but the Toledo, Ohio company has not responded to a request for details about those facilities, making that claim impossible to verify.
Mayer declined to provide a list of Genesis foster homes. The company’s website says it has more than 250 centers in 22 states.
Shifting priorities in real estate companies
Welltower’s move is an example of how large real estate investment firms, once attracted by the cash flow that nursing homes should generate due to the aging U.S. population, have distanced themselves from the industry. Nursing homes have been hammered by COVID-19 and now faced with higher long-term costs. Additionally, more families have become suspicious of nursing homes in the wake of the pandemic.
Genesis’ deal brings the nursing home back into a closer relationship with Welltower, which bought the majority of Genesis’ real estate for $2.4 billion in 2011.
As part of an effort to distance itself from Genesis, Welltower brought in ProMedica less than two years ago to oversee nine Genesis PowerBack facilities, including six in the Philadelphia area. Genesis introduced PowerBack in 2012 as a brand that focused more on short-term rehabilitation than most long-term care facilities.
But now, in a turn of events, Genesis is returning as the operator of five former PowerBack facilities in Pennsylvania and Colorado, Moyer said.
Another stage for Genesis
Founded in 1985, Genesis has had a turbulent financial history, including a bankruptcy in 2000, and has traversed public and private ownership over the past 20 years.
During Genesis’ last run as a public company, from 2015 to early 2021, the company shrank by nearly a third as Welltower and other landlords sold some nursing homes and handed over facilities to other operators in hopes they could turn a profit and keep up rising rents.
The sale of Genesis nursing homes hit New Jersey and Pennsylvania particularly hard. The number of Genesis facilities in these states has fallen to 25 late last year from 95 at the end of 2015, according to the Kennett Square company’s website and regulatory filings.
Genesis is not expanding its 10 facilities in New Jersey, the Genesis spokesman said, and it’s not clear who took over ProMedica’s operations there.
The three ProMedica Pennsylvania locations that Genesis won’t get will go to Tryko Partners, a Brick, NJ company. Those locations are in Allentown, Easton and Yardley, a spokesman said.
Tryko has expanded in the Philadelphia area, acquiring the former Restore Health University City, the Virtua health care homes in Berlin and Mount Holly, and The Springs at the Watermark last year, according to public records. Tryko is also trying to buy Inglis House, a non-profit nursing home that serves people with physical disabilities.
The Integra Secret
ProMedica, Welltower and Integra Healthcare, a new company that has partnered with Welltower to find new operators for the ProMedica website, have failed to respond to repeated questions about the ongoing transition at 147 former ProMedica nursing homes across 15 states.
Integra was a new company with no track record when Welltower merged with it last fall, but Welltower’s CEO reassured equity analysts that Integra’s directors had helped Welltower add 21 ProMedica locations and 35 Genesis nursing homes to new ones in 2021 relocate operator.
Welltower declined to provide details of these transactions.
The elusive connection between Integra and Welltower is evident in the 2021 transfer of numerous Genesis nursing homes in Pennsylvania and New Jersey to Complete Care Management of Lakewood, NJ
Public records in Montgomery County list Aurora Health Network LLC as the owner of Complete Care Harston Hall in Flourtown, a former Genesis site. Aurora Health co-founder Joel Landau is also a co-founder of Pinta Partners, the New York investment firm that controls Genesis. Additionally, Jonathan Kirschner is the chief financial officer of both Genesis and Aurora, according to the companies’ websites.
Related: Welltower CEO Shankh’s comment S. Mitra on Integra’s experience in the industry makes more sense.
“We have previously worked with Integra and its parent company on many of these transactions,” Mitra told analysts in November. “There is no question that they are significantly better in the specialty care business than we ever were and ever will be.”