HCR ManorCare, a Toledo, Ohio-based provider of short-term, post-hospital services and long-term care, filed Chapter 11 bankruptcy March 4 amid its agreement to transition leadership and ownership to real estate company Quality Care Properties, according to a Reuters report.
Here are nine things to know.
1. The agreement, which includes transition of its skilled nursing, assisted living, hospice and homecare businesses, comes amid HCR ManorCare efforts to improve its financial footing.
2. HCR ManorCare's recent financial struggles, which the company partially attributed to low occupancy, decreased government reimbursement affecting its post-acute and skilled nursing facilities, according to Reuters. Due to these issues, the national nursing home chain has previously been unable to pay rent to QCP per the companies' lease agreement covering nearly 300 facilities. Reuters reports HCR ManorCare said its total unpaid rent has reached at least $446 million and continues to rise. However, it expects the transaction, a debt-for-equity swap, to provide greater stability.
3. The transaction will occur as part of a bankruptcy reorganization plan that does not include HCR ManorCare's operating subsidiaries.
4. With the transaction, HCR ManorCare anticipates employees, creditors, vendors and suppliers, outside of QCP, will be paid as usual.
5. The national nursing home chain expects the transaction to close during the third quarter of this year, pending bankruptcy court and regulatory approvals.
6. In the meantime, Guy Sansone, a managing director and chairman of the Healthcare Industry Group at global professional services firm Alvarez & Marsal, and Laura Linynsky, QCP's senior vice president and a former COO of Sunrise Senior Living, will serve as consultants and work with HCR ManorCare leaders on the transition, officials said in a news release.
7. Once the transaction is completed, Mr. Sansone is slated to serve as CEO of HCR ManorCare, while Ms. Linynsky is slated to serve as interim CFO of the national nursing home chain.
8. Mark Ordan, CEO of QCP, said in a statement the agreement "facilitates a consensual resolution that provides stability and flexibility for the business. We see this as the best available opportunity to improve a challenging situation. We considered every possible option and determined that entering this agreement to take direct ownership of our tenant best positions QCP to reposition the business to realize the potential of its properties for QCP shareholders."
9. HCR ManorCare Chief Restructuring Officer John Castellano expressed similar sentiments in a statement, calling the agreement "a positive outcome for all of HCR ManorCare's stakeholders," as well as "an important step forward to strengthen the company's financial position and create value."
Read the full Reuters report here.
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