Genesis Healthcare Inc. is getting out of the home health and hospice business in an effort to get out of debt.
“Home health and hospice services are non-strategic businesses for Genesis to operate at this time, and we believe we can better allocate the capital by de-levering our balance sheet,” says Genesis CEO George V. Hager Jr., in a press release.
Genesis, one of the nation’s largest post-acute care providers, has agreed to sell the majority of its home health and hospice operations to Compassus for $84 million. Genesis intends to use the sale proceeds to repay debt.
Under the terms of the agreement, Compassus will acquire facilities in California, Idaho, Montana and New Mexico. Genesis will close remaining hospice operations in Arizona and Nevada. Genesis acquired the facilities in February 2015 through a deal with Skilled Healthcare. Genesis’ home health and hospice businesses had revenues of $70 million and $9 million, respectively, in 2015.
In January, Genesis divested its 18 Vintage Park Assisted Living assets, which it also acquired from the same 2015 Skilled Healthcare deal. The company also used the undisclosed sale proceeds to repay $54.2 million of its existing real estate bridge loan with Welltower, Inc. and to repay other debts, according to a press release. Genesis reported $1.23 billion in debt as of Dec. 31, 2015.
Genesis Healthcare operates more than 500 skilled nursing centers and assisted/senior living communities in 34 states nationwide. Its subsidiaries supply rehabilitation and respiratory therapy to more than 1,700 health care providers in 45 states and the District of Columbia.
The sale is expected to close within the next 90 days pending regulatory approvals and customary closing conditions. Compassus, a nationwide network of community-based post-acute care services focused on hospice, palliative and home health care, will operate more than 165 programs in 30 states after the sale is complete.