Two weeks ago, we reported on the restructuring that is taking place at Genesis Healthcare, with the infusion of new capital that will eventually take this new investor to a fully diluted ownership interest in excess of 40%. That news sent the share price tumbling 47% to a low of $0.43 per share. Trading volume over two days was more than 59 million shares, or more than 53% of the total float.
Then, a week later, the share price jumped by 48% mid-day to a high of $0.74 per share, ending the day at an increase of “just” 20%. Trading volume on that day? A mere 73 million shares, or about two-thirds of the float. The day before and the day after that momentous day, another 26 million shares traded hands. In theory, the entire ownership of the company turned over in a week’s time. Unless, of course, people were trading in and out of the stock.
But these shares that were traded are Class A shares, which constitute the public float. There are another 56 million shares (B and C) which are not traded and presumably owned by insiders, which takes the total shares to over 166 million, and a market cap of about $94 million, before the dilution from the new investor.
From what we hear, Joel Landau of Aurora Health Network is one smart cookie, and he is not going to just watch Genesis continue with business as usual, which has not had much success lately. With the various parts of the restructuring taking place, Genesis will be losing several dozen facilities, and our guess is that more will be coming as Mr. Landau, who effectively controls the Board, seeks to either sell or re-tenant more Genesis nursing facilities to smaller, regional operators who may be nimbler in these unusual times.
In addition, there is Genesis Rehab Services, which for several years was believed to be worth more than the rest of the company. Will the pieces be sold off, or will Landau and his team completely transform the company? Stay tuned.