After several years of declining occupancy, operations seem to be stabilizing at the largest skilled nursing provider in the country.
It has not been an easy past few years for Genesis Healthcare, or for the entire skilled nursing sector. But we always thought there would be some light at the end of the tunnel, and that nursing facilities would not go away, despite predictions of that for two or three decades.
Genesis had seen its occupancy decline pretty steadily for several years. But in the 2018 fourth quarter, census actually increased by 90 basis points from the year-ago quarter, to 85.6% based on operating beds. Genesis also posted sequential and same-facility increases.
The company will not be making a GAAP profit anytime soon, but it did post a 12.1% EBITDAR profit margin. Unfortunately, those profits were wiped out by interest and lease expense.
A 12% operating margin is not that bad in this environment, and should get better for them when PDPM is implemented. Sounding like a broken record, again, it is all about the capital structure and what you paid for your properties.