So far, two of the publicly traded senior care companies have received notices from the New York Stock Exchange warning them that they are out of compliance with the continued listing standard that requires a minimum average closing price of $1.00 per share over a consecutive 30 trading-day period: Capital Senior Living Corporation (April 10) and Genesis HealthCare (April 17). CSU dropped as low as $0.45 per share, while GEN fell to $0.78 per share. Genesis was still in compliance with the minimum market capitalization threshold of $50 million over a 30 trading-day period (at more than two times that level), but CSU’s average market cap did fall below the threshold.
Both companies will continue trading, and the notice does not constitute a default under any of their debt or lease agreements. And there will be a period where the companies will submit a plan to the NYSE with specific actions they will take to return to compliance. They’ll usually have a six-month period to get back on track, but GEN just received an update from the NYSE that in response to the COVID-19 pandemic, the compliance period for any company having previously received this notice will be suspended and resume on July 1, 2020. That means both companies will have until mid-December 2020 to get their share prices and market caps up.
It’s obviously a very difficult time for senior care providers, whether publicly traded, private or not-for-profit, and it’s unfortunate that this massive external crisis, among other troubles, has pushed these two companies below NYSE’s compliance threshold. And for CSU and GEN, which were already working hard to improve census and cash flow, this could not have come at a worse time.
Are any other companies at risk of this happening to them too? Had it not been for their 10-for-1 reverse stock split in October 2019, Five Star Senior Living may have been in trouble, but they aren’t far off, dropping to as low as $2.13 per share on March 18, but recovering above $3.00 per share, closing at $3.20 per share on April 24. Brookdale Senior Living fell to a recent low of $1.47 per share also on March 18, and has since rebounded to close at $3.26 per share on April 24.
A couple of REITs have also been trading in the low single digits, such as New Senior Investment Group (hitting a low of $1.72 per share on March 19), and Diversified Healthcare Trust (falling to $2.00 per share also on March 19). We’re not trying to be all doom and gloom, but you never know what bad economic, operations or COVID-19 news is around the corner to bring senior care stocks down even further.